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Short&Medium Term Finance (banker/customer relationship (Banks Duties,…
Short&Medium Term Finance
Introduction
Budgeting for borrowings
Overdrafts
Purpose for d2d
Increasing biz assets
Od& the operating cycle
Increasing total CA
Overdarft considerations
Using od to reduce other CA
Banks criteria for lending
Security
Personal guarantee
CAMPARI
Character of cust
Ability to borrow & repay
Margin of profit
Purpose
Amount
Repayment terms
Insurance against the possibility of non payment
Overdraft and loans compared
Advantages of overdraft
Only pays interest when overdrawn.
Flexible.
Repayable on demand
Advantages of loans
Knows what,when the repayment &how much the interest
.Makes budgeting simpler.
Customer no worry,ada element of security .
Carry a facility letter setting.
Leasing as a source of finance
Attractions
Hire purchase
Purely a source of finance
Minimise risk to lessee
banker/customer relationship
Banks Duties
Cust Duties
Bank's Right
Good Relationship
Fiduciary
Mortgagor/Mortgagee
Princial/agent
Bailor/Bailee
Receivable/Payable
Medium&long term loans
Term
Loan repayment profiles
Bullet
Balloon
Amortising/Straight repayment loan
Uses
Loan interest.
Level of risk
Level of interest rate in economy
Status of borrower
Security offered by borrower
Amount of the loan
Purpose of the loan
Duration of the loan