1.Principles of loan: CCCPARTS ( characteristic, capacity, capital, purpose, amount, repayment, security) Characteristic: How the borrower characteristic is, whether there is a bad record, whether there is a busine with the bank, how income of borrowers, whether stable.Washington with the bank\'s have 12 years of economic exchanges, and to the sister paper he had no any bad record, indicating that he is worthy of trust in personality.
Capacity: The amount of repayment to the lender, whether the lender or other liabilities.For example, a person needs loan of £200000, but he has other £100000 debts, so he does not have sufficient capacity to repay the debt.Washington works in a construction company, he has a relatively high income, he wanted a loan of £25000 now, the number is not a lot, with his repayment ability, he can repay these loan in short term, there is not any risks for bank.
Capital: The lender now has a number of funds, these include deposit, real estate values, with bonds, has the value of the stock, debt value for borrowers, lenders on existing aets appreciation of space.Washington existing value £75000 of property, but the future appreciation of the space is not clear, he in the bank has £15000 deposit, which can reduce the number he need a loan, he now holds part-time 40000 pounds, but he did not say the stock market.In summary, loans to Washington still has a certain risk.
Purpose: The whereabouts of the loans, whether the lender\'s loan purpose is reasonable, there is no risk.Such as a man loans from bank to do investment on share market, the loan purpose is not reasonable, because the stock a lot of uncertainty, and banks to take risks for investors, and ultimately gain but not belonging to the bank.Washington in this money is only to decorate their homes and it is no a large amount, his purpose of loan is reasonable.
Amount: The number of lenders need loans, as well as the number of loans they can.Like a person with higher credit limit, it can loan £100000, and he only need to borrow £40000, the number of loans is acceptable.Washington has a stable job and income, £75000 worth of property, £40000 worth of stock, and good credit records.It can loan a considerable amount of money, the number of 25000 pounds can be accepted by the bank.
Repayment: If the loan repayment is stable, legitimate.Ways of paying is reasonable.For example, a self-employed people, his source of repayment is not stable, so he can not meet the requirements of the bank.
Terms: whether the lender expects repayment period can be accepted, the higher the longer term interest, but the banks bear the risks will also increase.The shorter the period, the smaller the risk, but the has fewer bank\' s profits .Like a person to bank loans for a period of up to 20 years, banks can derive a lot of interest, but if the lender refuses repayment, banks will suffer a lo.Security: Whether lender has any aets as mortgage, whether the aet is done any other mortgage before .Such as lenders have mortgage the house, but he used the house now loans as collateral, the bank must consider the appropriatene of the mortgage.2.A good security: Simplified application proce: For consumers to apply for guarantee the proce is relatively simple, and both sides of the need to pay the fee is relatively low.If guarantee application proce is too complex will delay the consumers borrowing time, exorbitant fees would rush warranty costs.
Stable value: The collateral must remain stable value from beginning to end, this will affect the role of collateral in the collateral in the proce.So before the guarantee must be an accurate aement of the value of the collateral, and to ensure that in the next period of time the collateral remains its original value.There are a lot of uncertainties in the value of company\'s stock, land, housing, their value is not constant.
Liquidity: when a lender has repayment problems, he needs to sell aets, and release the guarantee, the lifting of the guarantee of the time spent longer, the greater loes for banks.Good collateral can quickly relieve the guarantee, and can be turn into cash as soon as poible.
3.Several types of security: Heritable security, life aurance, stock and shares, cash, goods, guarantees.Stock and shares which iued by government, local authorities, and companies.Advantages: Stock and shares are easy to measure the value.Stock and shares are easily to turn into cash. Some shares could remain stable value.
Disadvantages: there is an uncertainty of value, the value could be raise or fall in the future.Some company set rules to avoid shareholder to use their stock as security.Guarantees help people who do not have aets as security.Guarantees are easy to take, Guarantees do not have to check the title of property for borrowers.If borrowers have additional security, it could strength the guarantee.If the borrower failed to repayment after the contract period, they will pay expensive premium.For example, Peter wants loans from the bank, but he does not have any security; The guarantee helps Peter’s loan planning, he could receive loans through guarantees; However, if he could not repay the debt, he will pay for a heavy cost.
4.Several busine lending products: Buying outright, busine overdrafts, term loans, factor and invoice discounting.Buying outright helps the company buy aets.The company completely have the ownership of the property.The agreement is very flexible and east to arrange withdraw ant time.For credit side, when the interest falls in the future, the company have to pay higher interest rates.The company have to pay the full cost of the property, they could not spare these money to do other busine activities.The company takes all risks for the property.The company takes the maintenance of the property.
Busine overdrafts allows the company to have a sum of overdraft.These overdrafts could solve financial problems.The facilities in company are payable for debts.The busine only to have pay the interest from the beginning of the overdraft.For example, a new factory is planning to buy machinery, but they have shortage on finance, they could use busine over drafts to solve the problem, and the interest will be calculated since the date they apply these loans.
Term loans can be pay for shorter-term or longer-term aets.For example, ABC company is planning use term loan to buy some computer device for management department, the loan is the shorter- term.Factoring and invoice Discounting, when the contract was reached an agreement both buyer and seller, the sell receive the money at one, they do not need to wait for the time when customer started to transfer the money.For example, Black Forest Ltd was reached an agreement with its customer, with factoring and discounting, the company could receive the money immediately, they do not need to wait their customers for payments.
5.Commercial lending is quiet different from personal lending, commercial lending needs more steps, the borrower must provides busine plan, the lender must visit the company to know more about the borrower.Busine plan.It is an important fact whether the lender decided to lend money to the company.It records the company current situation and future direction.
The busine plan includes executive summary, market analysis, company description, organization, marketing strategy, service and product, funding requirement.Executive summary: it is an important part of busine plan, it described the purpose of loan, the planning time of busine, the function of company’s departments.Busine structure:
