Law Advices and Legal Tips

Your Business Loan Proposal in Honduras, Guatemala and El Salvador at commercial borrowing a regular business loan in Honduras, Guatemala and El Salvador, will have to develop a package of information to the prospective lender that clearly establishes the loan proposal exact needs. In short, your proposal should inform the lender for the purpose of the financing, the justification of the funds, and structure of the proposed loan. These elements, and others necessary for a well-structured proposal are described in detail below.

Purpose of funding in Honduras, Guatemala and El Salvador. The lender in Honduras, Guatemala and El Salvador will require a concise statement of why your company wants to borrow money. It is therefore very important for the borrower to the lender to provide a detailed explanation of the purpose of loan, along with how and where all funds will be used. Also, do not be surprised if the lender is not fully satisfied with a mere declaration of want or need to acquire an asset. He or she needs a fuller explanation of what you are trying to carry out the asset. For example, you may want to buy a new truck in order to increase productivity in warehouse operations by reducing labor costs and reduce exposure of the company work-related injuries. It is important for the lender in Honduras, Guatemala and El Salvador to understand the related cost savings that could effectively pay for the forklift.

Justification of the funds in Honduras, Guatemala and El Salvador. A well-prepared borrower provide the lender in Honduras , Guatemala and El Salvador with a statement explaining how a business loan is the best source of funds requested. The lender may be aware of alternative sources of funding necessary and often test whether the borrower is aware of them. Therefore, be prepared to explain why a loan is the most desirable and feasible due to funding more affordable, better, more leverage, or any other factor that convinced you choose to apply for the loan . You also have to be very specific as the method for determining the amount of funds you need as well as the amount of capital you are prepared to put in the agreement. If there is no logical reason to limit the investments of the company in Honduras, Guatemala and El Salvador, be sure to identify the lender. Otherwise, be prepared for the lender to insist that contribute a minimum amount in the transaction.

Structure of the proposed loan in Honduras, Guatemala and El Salvador. It’s better for the borrower to provide information on how the loan should be structured at the time of the loan application is submitted. Structure of loans simply refers to the terms and conditions that define the transaction between you and the lender. You have the most viable opportunity to influence the structure of the loan at the start of negotiations. When you enter your preferences on the right front, which really set the tone for all subsequent discussions, and you could end up getting a better deal, demonstrating active concern for these issues instead of waiting for the lender to dictate their own terms.

Of course, the lender in Honduras, Guatemala and El Salvador will always have the last word in determining the terms of the agreement. But your suggestion of reasonable conditions in the proposal is an important message to the lender that could influence their business decisions. Components of the loan structure typically include:
* Loan Amount – Once again, exactly how much money you need and why, and be willing to defend it with data and information.
* Term of Loan – Define the period in which it would be advantageous for the company to repay the loan. Remember, of course, that the maximum loan limit (and maybe even a minimum) the terms.
* Interest rate – Interest rate risk is a function of the lender. Certainly does not hurt to ask (unless your offer is simply too low to be openly insulting), but be realistic about how much risk you present your offer to the lender.

Real estate loans are generally safer than equipment loans, equipment loans and are usually safer than working capital loans. Usually in Honduras, Guatemala and El Salvador, goes without saying that lenders usually have absolutely no appreciation for the desire for a borrower to maintain cash reserves, especially when part of the loan application is specified for that purpose. It is therefore wise to be prepared to rule that part of its proposal, since most lenders will not feel it is prudent to cash funds can not be guaranteed to be used the way it was requested and Instead you can finish the expansion of lender risk of loss.

Also, before starting negotiations on loan structure in Honduras, Guatemala and El Salvador, make sure you know how to calculate loan payment amount, interest rate and repayment term you are applying. Being able to do this accurately is essential for you to determine whether the payment is in the budget of your company. Certainly there is no sense to accept the conditions that you will not be able to accomplish. Being able to calculate the payment can also act as a guarantee for you, lenders are more perfect than any other, and have been known to make mistakes.

The use of loan funds in Honduras, Guatemala and El Salvador. If the borrower does not refer specifically to state exactly where, when needed and the amount of money, the lender decides on the basis of limited information, which can slow the approval process. Your loan proposal must include a specific timetable that defines how the loan will be used. Moreover, in all honesty, the lender is entitled to know exactly where every dollar of your money goes. If you are buying an asset, this amount is easy to follow and define. However, if you use a portion of the borrowings for working capital, specifying when applying these funds is a little harder. To finance working capital in Honduras, Guatemala and El Salvador, be prepared to produce a Detailed Month-to-month cash flow chart projection, predicting how and when the cash proceeds will be used and the description of the planned expenditure or purchases to be paid.

Approval, no doubt, will be less difficult if we restrict the use of proceeds for working capital to large ticket items such as inventory, contracted services, or other significant costs that the lender can easily identify without the documentation too. Collateral in Honduras , Guatemala and El Salvador. The borrower should define precisely the goods that are reasonably available to secure the loan. The warranty is very important to lenders because it provides a concrete alternative to the normal liquidation of a loan, if necessary. They usually ask for 100% coverage of the loan amount (depending on the strength of the borrower, this percentage could be less), with assets valued on a discounted basis. For example, if you are thinking of buying a building with the product of your loan, the lender will discount the value of the property to determine a value of collateral. If the lender’s normal policy defines a feed rate of 75% on commercial property, the lender will reduce the value of the property you are buying a 25% to determine the value of the collateral.

On that basis, then it will lend up to 75% of the cost of construction. If you need a larger amount, the lender may consider more money, but will require additional commitment assets in order to obtain additional funds. The lenders in Honduras, Guatemala and El Salvador generally real property 80% margin, but This figure can vary substantially depending on the policy loan from the lender specifically and the state of local and national housing markets. Unimproved property (raw land) is typically in the range 50% of its market value. General equipment and furniture worth 50% of the cost, and little or no value is given to the leasehold improvements or fixtures unless the real estate securing the loan also. Accounts receivable and inventory (or current assets) are typically of little, if any, value to the lender unless they are monitored regularly.