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CHAPTER 5: LOANS AND CREDIT - Coggle Diagram
CHAPTER 5: LOANS AND CREDIT
Loans
Small businesses
Borrow from a bank (high interest) - Debt financing
Large businesses & Corporations
!!! Stocks/Shares or Bonds (LOW INTEREST) - Equity financing
Bonds (LOW INTEREST) - Debt financing
Lending decision
The Company
The ability to repay the loan from the operating cash flow
The bank
Analyses the customer's annual report
Evaluates the current and future situation of the customer
Discusses the loans with the customers
Got different limits for the sectors & have a rating for each sector
Financing foreign transactions
Looks at the costumer's credit score
Not having a limit
inability to finance it
(too dangerous)
Lending process
Screening process
Negotiation
Documents Submission
Loan application finalization
Loan application
Approval of loan