At present, there are many banks in Indonesia that offer investment loan products, especially for micro and medium entrepreneurs who want to develop their businesses. In addition to business capital loans, there is still another type of credit that is specifically intended for business owners who want to develop their business, namely investment loans. As the name suggests, this credit is specifically intended to help entrepreneurs to help develop their businesses.
When looking at the functional aspect, there are two types of credit offered by the banking industry, one of which is an investment credit or can also be called an investment loan. Owning and operating a successful business is something that is always desired by entrepreneurs. In starting a business, courage and ability or skill are needed, but both of these things will not seem useful without the initial capital for the business. Investment loans or investment loans are specifically present to help entrepreneurs realize their dreams.
Unlike other loans, investment loans or investment loans are generally included in the type of long-term credit. This credit is usually given to help finance the procurement of capital goods in the context of modernization, rehabilitation, expansion and various special needs related to business investment. Examples of forms of investment credit for example to buy new machines, build new factories, renovate factory buildings and so forth. This credit is usually used for needs whose usage period is relatively long and requires a very large amount of capital.
Characteristics – Investment Credit Characteristics
There are several characteristics of investment loans, namely:
- Credit is adjusted to programs created by the government to encourage business activities that open up large enough vacancies
- Investment credit is given to help meet the needs of investment as well as its movements which directly get supervision from the central bank
- Investment credit is productive because it is used to repair or add capital goods in an effort to increase productivity
Investment Credit Provisions
Each bank that offers investment loans imposes different terms and conditions. However, in broad outline, there are a number of things that must be fulfilled by prospective debtors, for example, various company legality documents. The following are general conditions and requirements for applying for investment loans to banks:
The policies adopted by each bank are different, and so are the credit facilities they offer. Some banks offer investment loans with a tenor of up to 8 years and some even dare to provide a period of up to 15 years. Not a few banks also impose a tenor for investment loans by considering the ability of customers and the company’s cash flow.
In contrast to credit in general, investment loans provide limits that are generally much larger because these loans are intended for financing which is also very large. Credit limits given by banks are usually in the range of hundreds of millions to billions of dollars.
Interest rates imposed by each bank also vary. Last year for example, the interest rates for investment loans at Persero banks were in the range of 11.45%, state banks were at 12.45%, national private banks were 12.87%, commercial banks were 12.21% and foreign banks and joint venture banks were using 10.67%. interest rates will vary depending on fluctuations in market interest rates.
Requirements for Submitting Investment Loans
The following are the conditions that must be fulfilled by prospective debtors who wish to apply for investment loans:
- Prospective debtors are business entities in the form of limited liability companies that are either open (PT. Tbk) or closed (PT), CV or Recommended Companies and individuals
- Attach business legality documents such as SIUP, NPWP, SITU as well as business certificate or TDP
- Prospective borrowers must attach a valid identity card, such as an ID card or driver’s license. For business entities must attach the deed of establishment and amendments and family card
- Attach a photocopy of the current account statement or savings account for at least the last 3 months
It must be understood that the greater the number of loans obtained from investment loan products, the risk that must be borne will also be even greater, especially considering the credit tenure is fairly long. Even so, if it turns out that the assisted project is running well and produces good profits, then this credit product can be one source of income that is very beneficial to banking institutions. That is because the interest earned from investment loans will be obtained in the long term according to the tenor loan taken by the debtor.