Investment credit

An investment loan is usually in the form of an equipment loan, usually granted by a credit institution.

The investment credit itself

Types of funding

It can be a medium-term loan (3-7 years) for the purchase of equipment, or a long-term loan in the case of heavy equipment, production line and industrial buildings. In the case of a large project it can involve an investment bank

General characteristics

  • It usually finances a fraction (70 to 80%) of the cost, the rest being self-financing .
  • It generally corresponds to the technique of a depreciable loan , either by constant amortization or at constant annuities .
  • The rate is often variable (indexed to market rates).
  • The duration is generally shorter than the expected life of the equipment.

Investment credit line

Some companies benefit from their bank or funding pool of a credit line investment, annual or multi-year, allowing them to make prints each new capital expenditure in respect of a total ceiling allocated. This technique is close to revolving credit or permanent credit, except that the ceiling concerns the total amount of drawdowns during the defined period and not the outstanding amount of credits taking into account repayments.

Leave a Reply

Your email address will not be published. Required fields are marked *