Why should a company choose a city for a loan?
A business relies on loans in its early stages. Finding the right source of finance is therefore important. Some companies turn to cities for financial support. This strategy gives them a multitude of advantages. This article provides an insight into them.
Fast loan with affordable interest rates
The city applies relatively low interest rates. In order to understand the issues that motivate the company to borrow money from a city, visit the site.
The city authorities do not grant the loan in order to make money from the interest. On the contrary, they hope for jobs for their inhabitants from the companies. This is what encourages them to grant the loans. In addition, the company has the money at its disposal very quickly. The municipality grants the capital quickly. The municipality hopes to encourage the structure to fulfil its wish.
The absence of extreme pressure
The city authorities are particularly lenient towards the company to which they grant a loan. Banks do not hesitate to take possession of the company for non-payment. With municipalities such a procedure is never initiated.
Similarly, when the structure's guarantee is not up to the loan, arrangements are possible. The company expresses its difficulties and solutions are found at its convenience. It is thus spared the risk of closure.
No need for a guarantor
One of the constraints with a loan from a bank is the need for a guarantor. In place of a guarantee, this person acts as guarantor for the loan. And when the company is unable to pay the debt, the guarantor bears the burden.
The problem with this strategy is the risk to the guarantor. Economic movements in companies are not stable. So as soon as the structure is destabilised, the guarantor is imprisoned. In the best case scenario, the bank rips off his assets.