Detailed Explanation of Corporate Loan Types and Financing Methods (Must-Read for Senior Executives)

(I) Working Capital Loans General Working Capital Loans: The most common form of corporate lending. Purpose: To meet enterprises’ short-term funding needs arising from day-to-day operations. Common Types: 1. Tax-Based Loans: Unsecured credit loans granted based on a company’s tax payment records and tax credit rating. Fast approval; purely credit-based. 2. Invoice Loans / Order Loans: Loans extended against value-added tax (VAT) invoices already issued by the enterprise or against signed procurement/sales contracts. 3. Supply Chain Financing: Financing provided to upstream suppliers and downstream distributors centered around a core enterprise (e.g., accounts receivable pledge, factoring, prepayment financing). (II) Fixed Asset Loans Purpose: Loans used for enterprise investment projects involving new construction, expansion, renovation, or acquisition of fixed assets; typically longer-term. Common Types: 1. Project Loans: Targeted at specific construction projects (e.g., building factories, purchasing production lines). 2. Technological Upgrade Loans: Used to upgrade existing equipment or production processes. (III) M&A Loans Purpose: Loans specifically intended to finance merger and acquisition transaction prices and related expenses. Banks conduct rigorous due diligence on the acquiring party, target company, and transaction structure. (IV) Trade Finance Loans Purpose: Financing provided to support various stages of genuine international or domestic trade activities. Common Types: 1. Letter-of-Credit–Related Financing (e.g., import negotiation, export negotiation, packing loans). 2. Bill Discounting / Bill-Based Loans: Enterprises holding unexpired bank-accepted bills or commercially accepted bills transfer them to banks; banks pay the face value minus discount interest. This is a typical 'bill-based loan'. 3. Accounts Receivable Factoring / Pledge. 4. Warehouse Receipt Pledge Loans. (V) Operating Property Mortgage Loans Purpose: Loans secured by commercial properties owned or held by the enterprise (e.g., office buildings, shopping malls, hotels), with repayment sourced from the property’s operating income. II. Classification by Security Method This is the core dimension banks use to manage risk. (I) Unsecured Loans: No collateral required; granted solely based on the enterprise’s operational performance, credit history, cash flow, etc. Applicable to: Tax-based loans, invoice loans, and certain online credit products targeting high-quality small and medium-sized enterprises (SMEs). (II) Guarantee-Secured Loans: Third parties (e.g., other enterprises, guarantee companies, professional institutions) provide joint and several liability guarantees. Commonly seen in: SME lending, where guarantee companies are often engaged to enhance creditworthiness. (III) Mortgage Loans: Real estate (land, buildings) or movable assets (equipment, inventory) serve as collateral. Most common: Real estate mortgage loans constitute the primary channel for enterprises to obtain large-scale financing. (IV) Pledge Loans: Rights certificates or movable assets are pledged to the bank, with physical possession transferred to the bank. Common pledged assets: Time deposits, government bonds, accounts receivable, equity, bills of lading, warehouse receipts, etc.

If it’s all about making money from money, why do our tech companies prefer lending businesses?

Based in Wuhan, with 10 years of experience in the lending industry. 1. Lending businesses are highly profitable: funds obtained from banks at ~3% interest can be lent out at over 20%. 2. Tech companies possess substantial traffic, enabling relatively low-cost customer acquisition. 3. Short-term thinking: They seek only short-term, relatively certain returns. Investing in future-oriented industries entails high upfront investment, high risk, and excessive uncertainty. 4. The lending industry still requires significant improvement in terms of regulatory standardization.

Sensient Technologies Secures New $400M Delayed-Draw Term Loan

Jun 23, 2026

Sensient Technologies has secured a $400 million unsecured delayed-draw term loan to refinance existing debt and support working capital. The facility matures five years after closing with interest rates tied to the company's net leverage ratio.

Sensient Technologies Secures $400 Million Five-Year Unsecured Delayed-Draw Term Loan

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