Financing

Financing

What's the best way to finance your business and its operations? Do you need a working capital credit line or a bilateral loan for day-to-day expenses? Or perhaps major funding for capital investment, such as a syndicated loan under Debt Issues.

It is important for a business to have a clear financial strategy. This is true for both new companies and those with a long history. The strategy constitutes your company's guiding principles in all its financial decisions.

At Danske Bank we can help you plan the optimal strategy for your business. Of course the strategy must be re-evaluated whenever the business undergoes changes in its financial circumstances.

Factors involved
When you plan your financial strategy, these are some of the factors you should consider:
  • Future need for liquidity
  • Future cash flow
  • Relation between assets and liabilities
  • Your company's risk profile
  • Time horizon
  • How your business will be financed

Bilateral Loans

Short-term loans

Short-term facilities are normally used for general corporate purposes. You can draw fixed interest rate advances over periods from as short as overnight to up to 12 months, with longer periods available by agreement. Interest is based on interbank rates or another standard rate and is charged at an agreed margin over the rate for the loan period. Interest is payable at the end of the period. You can also obtain short-term facilities on an "until further notice" basis. This enables you to repay advances and draw down further amounts later depending on your cash flow.

Medium-term loans
Medium-term loan are used mainly for financing investments in fixed assets (property, machinery, etc.) or acquisitions. They can also establish longer-term funding on your balance sheet to provide a sound base for your company's financing.
 
Flexibility and convenience
At Danske Bank we offer flexible facilities that can be structured to suit your company's particular needs. You can make drawdowns over a period of time, such as during the construction of a building when you are making instalment payments, and then consolidate them into one amount on a specified date, after which a repayment schedule takes effect. You can take out loans with or without repayment schedules, make repayments annually or semi-annually, or make full repayment at the final maturity.
 
Subsidised Loans
In Germany, several public institutions, e.g. Kreditanstalt für Wiederaufbau (KfW), offer favourable credits, subsidies and capital funds for business investment in Germany. These support programmes are also available to foreign enterprises that make capital investments in Germany. Scandinavian enterprises often use the KfW programme for credits to small and medium-sized enterprises. Depending on the applicable programme the maturity, repayment profiles and interest rates vary. The interest rate is often below the market rate.
Likewise, German companies that invest in Scandinavia can request financing from the KfW programme. Danske Bank has many years’ experience in negotiating subsidised credits in both Germany and Scandinavia.

Working Capital Financing

​Most businesses need financing for purchasing, production, payroll, rent, distribution and other operating costs. The challenge is to determine the most advantageous methods of raising working capital.

Commercial line of credit
The most common form of operating financing is a commercial line of credit, or overdraft facility. It is an account with an agreed-upon credit limit up to which your business can draw cash. Interest is charged at an agreed margin over the Bank's base rate and varies depending on market conditions. Since it may be difficult to provide concrete collateral for a line of credit, banks often require that businesses regularly deposit their turnover into the account.
 

Debt Issues

Debt issues are an effective funding method offering several advantages for many companies.
 
We offer a complete range of debt capital markets products as well as research, origination, distribution and trading services.
You will find more information here.
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