Investments. Long-term lending (most important)

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Investments. Long-term lending (most important)

Lecture notes, cheat sheets

Directory / Lecture notes, cheat sheets

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LONG-TERM LENDING

Long-term bank lending is carried out on the principles of:

1) repayment, obligatory payment to the creditor of the amount of the principal debt on the agreed terms;

2) payment for a bank loan, based on the reimbursable nature of the services provided by banks in lending. Interest is charged for a bank loan. The interest rate is set by the parties under the loan agreement;

3) urgency, predetermined terms for the return of borrowed funds to the creditor. The term of the loan is the maximum time the loan funds are at the disposal of the borrower.

The collateral is realized with the help of a pledge, bank guarantees, insurance and methods provided by law and the agreement between the partners.

The fulfillment of the main obligation is supported by: a pledge, a penalty, a bank guarantee, a surety, a deposit.

Bail - the right of the creditor to receive compensation from the value of the pledged property to other creditors.

Surety. The guarantor undertakes to be responsible to the lender for the fulfillment by the borrower of his obligations in whole or in part. Guarantees are provided by legal entities and individuals. A surety agreement is signed between the guarantor and the creditor bank.

Penalty is the amount of money that the debtor is obliged to pay to the creditor in case of default. The penalty is set as a percentage of the amount of untimely fulfillment of the obligation for each day of delay.

Deposit - the amount of money issued by one of the contracting parties on account of payments due from it under the contract to the other party as evidence of the conclusion of the contract and to ensure its execution.

Prepaid expense - the amount of money that is transferred on account of the fulfillment of a contractual obligation. The advance is taken into account against the final payment stipulated by the contract.

Detention of the debtor's property. The creditor who has the thing to be transferred to the debtor has the right to retain it until the corresponding obligation is performed by the debtor.

The form of loan security is the bank's requirement to keep without using a certain part of the loan received (10%) in the form of a compensatory balance of money on the company's current account.

For the enterprise-investor, the value of the interest rate on the loan matters. The interest rate for a loan differs in forms, types and sizes. The credit rate can be fixed (constant) and floating (changing).

The type of credit rate (interest and discount) affects the cost of a bank loan. If the size of these rates is the same, then the use of the interest rate will be more preferential than the discount rate.

Author: Kuznetsova S.A.

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