Current account credit from the house bank
The current account credit is often used by self-employed persons as well as start-ups. Flexibility and simplicity speak for the current account credit. But is the current account credit really suitable for setting up a business?
What is a bank overdraft?
A current account credit is often used by business customers – entrepreneurs, freelancers, start-up entrepreneurs – as a bridging loan. In addition, the current account credit is not earmarked and thus represents a special form of liquidity reserve for each entrepreneur.
With the current account credit, the self-employed can respond quickly and flexibly to any economic situation.
From a legal perspective, the overdraft facility is a loan. A current account credit must be requested from a bank and contractually agreed. The contract for current account credit regulates the maximum amount of credit as well as term and costs. If the agreed credit limit is insufficient, the bank must be informed of a possible overdraft. Overdraft facilities are settled via business accounts.
The current account credit can be equated to the commonly known disposition credit (Dispo) or a simple overdraft for traders.
How does an entrepreneur get a current account credit?
For the start-up company to receive a current account credit, he must have a business account at his house bank lead or set up. Since a start-up entrepreneur can not present a financial statement, it would be advantageous to open a business account with current account credit where the founder leads his private checking account. The current account credit is otherwise applied for like any other loan. The bank checks the creditworthiness in detail before you assign a current account credit. The creditworthiness depends on the personal creditworthiness of the applicant, but also on the chosen legal form of a company.
If you would like to apply for a current account overdraft, look up the conversation with your house bank in advance. Likewise, it would be advisable to clarify the possible consequences of a planned change of legal form or a change of the house bank, in the case of an already existing overdraft facility. Not infrequently, the banks cancel the already granted current account credit, for example, when the entrepreneur changes from a limited liability company to a sole proprietorship.
The current account credit is provided with a so-called credit line (credit limit) in a certain amount of credit and is usually valid for six months. The current account credit can be used after establishment without further explicit consultation with the house bank. Mostly after the six months an extension (prolongation) or deferment takes place.