7.2 Credit obtaining

Slovak banks provide credits of various types for different purposes for business entities. This is the list of credits which are normally provided on the Slovak market :

Overdraft loan – stable allowance for balance overdraft on the account, designed for current, short term covering of cash-flow

Working capital loan – one-time loan financing the purchase of assets which is assigned for further sale or work

Revolving credit – stable credit restrictions for a certain period (approximately 3 years) which is possible to use for business needs, e.g. for financing seasonal fluctuations. There is a possibility of variable drawings and redemption during the period of the loan.

Development loan – designed for acquisition or modernization of tangible or intangible fixed assets, generally provided for longer time period

The entity requesting credit has to fulfil the fundamental prerequisite of the running of his/her business in the Slovak Republic. Required length of the business activity is different according to concrete conditions of individual banks. Conducting business for two years or for a full accounting period is considered standard.

Standard conditions for granting the loan:

proving of the capacity to meet obligations arising from the loan, repay the loan including interests and fees within requested maturity and under terms and conditions agreed upon in advance ,

purpose of the loan - the bank grants the loan for a specific purpose related to investment finance, procurement of any assets crucial for the enterpriser to perform his business activities ,

loans associated with business activity that does not jeopardize public order, morality or environment ,

the loan including interests and fees must be sufficiently covered by collateral. Usual forms of a loan security are :

immovable property items (building, grounds)

movable property items (technologies, means of transport)

financial property items (securities, receivables, term deposits)

other property items according to the agreement with the bank (patents, know-how)

third - party guarantee or bank guarantee

blank promissory note

Each bank in Slovakia grants a loan on the submitted documents of the enterpriser. The documents are in a written form and their reason is to prove the bank that applicant is capable to repay the loan. For this purpose, Slovak banks require by default :

documents certifying the license to perform the business in the Slovak Republic ,

financial statements of the last periods ,

detailed business plan according to the structure required by the bank ,

documents related to the loan security ,

in case of a capital project, the capital project or a project documentation of the construction is required ,

if the loan will be spent on the financing of work, the work contract between the enterpriser and the constructor has to be submitted ,

if there are other documents related to the loan purpose or other supporting documentation, it is recommended to submit it

All these conditions are universal and may vary from bank to bank therefore the person interested in the loan is recommended to find out the conditions by personal visit in the branch where s/he can also take over the forms and details of the loan application.