loanScribd Upload a Document Search Documents

Explore
Documents
Books - Fiction
Books - Non-fiction
Health & Medicine
Brochures/Catalogs
Government Docs
How-To Guides/Manuals
Magazines/Newspapers
Recipes/Menus
School Work
+ all categories
Featured
Recent
People
Authors
Students
Researchers
Publishers
Government & Nonprofits
Businesses
Musicians
Artists & Designers
Teachers
+ all categories
Most Followed
Popular
Seema Tank
Account
Home
My Documents
My Collections
My Shelf
View Public Profile
Messages
Notifications
Settings
Help
Log Out
1

/ 9

View Mode
Book
Slideshow
Scroll

Reading should be social! Post a message on your social networks to let others
know what you're reading. Select the sites below and start sharing.
Link accountReadcast this DocumentReadcast Complete!Click 'send' to
Readcast!edit preferences
Set your preferences for next time...
Choose 'auto' to readcast without being prompted.
Seema TankLink accountAdvancedCancel
Add a Comment
Submitshare:Characters: ...Share & Embed
Download this Document for Free

Bank-Term LoansDefinitionA bank loan to a company, with a fixed maturity and

often featuringamortization of principal. If this loan is in the form of a line
of credit, thefunds are drawn down shortly after the agreement is signed.
Otherwise,the borrower usually uses the funds from the loan soon after
theybecome available. Bank term loans are very a common kind of lending.
Definition or Explanation:Term loans are the basic vanilla commercialloan. They
typically carry fixed interest rates, and monthly or quarterlyrepayment
schedulesand include a set maturity date. Bankers tend to classify term loans
intotwo categories:yIntermediate-term loans:Usually running less than three
years,these loans are generally repaid in monthly installments(sometimes with
balloon payments) from a business's cash flow.According to the American Bankers
Association, repayment isoften tied directly to the useful life of the asset
being financed.yLong-term loans:These loans are commonly set for more thanthree
years. Most are between three and 10 years, and some run for as long as 20
years. Long-term loans are collateralized by abusiness's assets and typically
require quarterly or monthlypayments derived from profits or cash flow. These
loans usuallycarry wording that limits the amount of additional
financialcommitments the business may take on (including other debts butalso
dividends or principals' salaries), and they sometimes requirethat a certain
amount of profit be set-aside to repay the loan.Appropriate For:Established
small businesses that can leverage soundfinancial statements and substantial
down payments to minimize
monthly payments and total loan costs. Repayment is typically linked insome way
to the item financed. Term loans require collateral and arelatively rigorous
approval process but can help reduce risk byminimizing costs. Before deciding to
finance equipment, borrowersshould be sure they can they make full use of
ownership-related benefits,such as depreciation, and should compare the cost
with that leasing.Supply:Abundant but highly differentiated. The degree of
financialstrength required to receive loan approval can vary tremendously
frombank to bank, depending on the level of risk the bank is willing to
takeon.Best Use:Construction; major capital improvements; large
capitalinvestments, such as machinery; working capital; purchases of
existingbusinesses.Cost:Inexpensive if the borrower can pass the financial
litmus tests.Rates vary, making it worthwhile to shop, but generally run around
2.5points over prime for loans of less than seven years and 3.0 points over
prime for longer loans. Fees totaling up to 1 percent are common(though this
varies greatly, too), with higher fees on construction loans.Ease of
Acquisition:Challenging but sometimes a moderate challengewhen smaller amounts
are involved. However, for loans more than$100,000 (sometimes up to $200,000),
you need a complete set of financial statements and must undergo a complete
financial analysis bythe lending institution.Range of Funds Typically
Available:$25,000 and greater.FirstSteps What do banks look for when making
decisions about term loans? Well,the "five C's" continue to be of utmost
importance.yCharacter:How have you managed other loans (business andpersonal)?
What is your business experience? "If a corporate
executive wants to open a restaurant, then he'd better haverestaurant
experience," says Rob Fazzini, senior vice president atBusey Bank in
Illinois.yCredit capacity:The bank will conduct a full credit analysis,including
a detailed review of financial statements and personalfinances to assess your
ability to repay.yCollateral:This is the primary source of repayment. Expect
thebank to want this source to be larger than the amount
you'reborrowing.yCapital:What assets do you own that can be quickly turned
intocash if necessary? The bank wants to know what you own outsideof the
business-bonds, stocks, apartment buildings-that might be analternate repayment
source. If there is a loss, your assets are tappedfirst, not the bank's. Or, as
one astute businessman puts it, "Bankslike to lend to people who already have
money." You will mostlikely have to add a personal guarantee to all of that,
too.yComfort/confidence with the business plan:How accurate arethe revenue and
expense projections? Expect the bank to make adetailed judgment. What is the
condition of the economy and theindustry: "Are you selling buggy whips or
computers?" Fazziniasks.Use the following guidelines when selecting a business
bank:yAsk friends where they bank and if they are satisfied.yForge a
relationship with a bank long before you will need a loan.You'll find out how
they treat you. Get to know some folks at thebank on a first-name basis. Start
building a relationship. Believe itor not, banks want to talk to you even if
they cannot lend youmoney.yScan your newspaper for evidence of who is making the

kinds of loans you are seeking. Not all banks can be the best at everything.Some
are better at business loans; some are better with consumer deals.
loanDownload this Document for FreePrintMobileCollectionsReport DocumentReport
this document?
Please tell us reason(s) for reporting this document

Spam or junk
Porn adult content
Hateful or offensive
If you are the copyright owner of this document and want to report it, please
follow these directions to submit a copyright infringement notice.
Report Cancel
This is a private document.
Info and Rating
Reads:20Uploaded:02/20/2011Category:Uncategorized.Rated:Copyright:Attribution
Non-commercial
Bhavesh Gupta
Share & Embed
More from this user
PreviousNext9 p.9 p.4 p.52 p.
Add a Comment

Submitshare:Characters: ...
Print this document
High Quality
Open the downloaded document, and select print from the file menu (PDF reader
required).
Download and Print
Add this document to your Collections
This is a private document, so it may only be added to private collections.
+ Create a New Collection
Name:
Description:
Collection Type:public - locked public - moderated private
public locked: only you can add to this collection, but others can view it
public moderated: others can add to this collection, but you approve or reject
additions
private: only you can add to this collection, and only you will be able to view
it
Save collectionCancel
Finished? Back to Document
Upload a Document Search Documents Follow
Us!scribd.com/scribdtwitter.com/scribdfacebook.com/scribdAboutPressBlogPartner
sScribd
101Web StuffScribd StoreSupportFAQDevelopers /
APIJobsTermsCopyrightPrivacyCopyright © 2011 Scribd Inc.Language:Choose the
language in which you want to experience Scribd:EnglishEspañolPortuguês
(Brasil)