At some point every growing business needs to invest, and sometimes your own funds aren’t enough to cover all the costs.

That’s why investments are often financed with medium- and long-term bank loans, usually to complement your own funds and to cover the entire life of the investment project.

Repayment can be flexible because:

• the repayment schedule can be tailored to your business’s seasonality.
• You can also benefit from a grace period. For example, if you want to buy new equipment with an investment loan, the grace period gives you breathing room on repayments — the time needed to bring in the equipment, install it, train the team and put it into operation.

When you take out an investment loan, it’s very important to match the asset’s useful life to the loan term, so that the source of repayment is generated by the financed asset — in other words, by the reason you’re borrowing.

Another important aspect is the currency of the loan. It’s preferable to borrow in the same currency as your income. If your business operates only in lei, taking out a foreign-currency loan can be imprudent because of exchange rate risk.

When should you take out an investment loan?

• When the loan’s purpose helps you grow your business or improve operations
• When the financed asset will generate enough cash inflows to repay the loan and interest

When should you not take out an investment loan?

• When the financing would only cover a short-term need
• When the loan’s purpose won’t add value to your business

Depending on the collateral, you can choose the loan that best fits your business. Find out more about BT’s medium- and long-term loans.