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Small Business Lending & International lending - Coggle Diagram
Small Business Lending & International lending
1.Small Business Lending
1.2How lenders organise to small business
FI organize their smaller business loans along similar lines to their retail accounts
: have account centralised, no manager relationship, automated credit scoring processes
Implicate the bank cutoff level
1.3The risks of small business loan
Key person risk
Lack of Capital
:
loans to the business rather than through capital
the limited financial resources
a small amount of capital
lack of trạck record
no record the paid debt
Poor accounting records
Delays in the preparation of financial statements
Emphasis on taxation
. Reporting freedoms
1.1Cheracteristics
Financing takes 3 main forms
Floating Rate Loans
:Charged Interest can change over time, the main type is overdrafts, can be flexible
Fixed rate Loans:
fixed for the life of loan, made in regular instalments, for the purpose of non-current asset
Bill Finance:
A bill is a discount security which is typically issued for periods of around ninety days
SB lending 1/3 size of the large business
1.4 the approaches to lend to small business
The relationship management-CF project
Analysis of historical financials
preparing the financial statements for analysis
conducting the
analysis using tools such as ratios
Assessment of risks
Analysis the CF project
The importance of security
The credit scoring
Structure
At least 30 000 applications
ifty variables and, from these, attempts to find the combination
that most accurately predicts loan repayment
combination usually involves ten variables
credit scoring model ranges from the more traditional linear probability, logit, probit and discriminant analysis models, through to options pricing theory and neural networks
2.International Lending
country risk
macro-economic
conditions
detailed assessment of the .political climate
rule of law
STRUCTURE OF IFS
• Foreign exchange
• Global capital
• International bond
• International equity
• Euro market (predominant)
• Futures, swaps
trade finance products
• Overdrafts
• Loans
• Negotiations
• Specialized advances
• Trade credit
• Factoring
• Leasing
• Hire purchase
• Forfaiting
• discounting
Methods of payment and financing techniques
Prepayment
Documentary export bills for collection
• Important factors