Chap 017

Chapter 17 - Lending to Business Firms Fi rms and Pricing Business Loans

CHAPTER 17 LENDING TO BUSINESS FIRMS AND PRICING BUSINESS LOANS

Goal of This Chapter: The purpose of this chapter is to explore h ow an!ers can respond to a  usiness customer see!ing a loan and to re"eal the factors the# must consider in e"aluating a  usiness loan re$uest% &n addition' we explore the different methods methods used toda# to price usiness loans and to e"aluate the strengths and wea!nesses of these pricing methods for achie"ing a financial institution(s goals% )e# Topics in This Chapter  • • • • • •

T#pes of Business Loans: *hort Term and Long Term +nal#,ing Business Loan e$uests Collateral and Contingent Liailities *ources and .ses of Business Funds Pricing Business Loans Customer Profitailit# +nal#sis Chapter /utline

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&ntroduction Brief 0i 0istor# or# of of Bu Business Le Lending T#pes pes of Business Loans +% *hort-Term Business Loans B% Long-Term Bu Business Lo Loans *hor *hortt-T Term Lo Loan anss to Busi Busine ness ss Firm Firmss +% *el *elf-Li$uidating &n"ento ntor# Lo Loans B% 2or!ing Capital Loans C% &nterim Construction Financing 3% *ecurit# 3ealer Financing 4% etailer and 4$uipment Fin Financin cing F% +sset-Based Fi Financing G% *#ndicated Loans 5*6Cs Long-T g-Term Loa Loan ns to to Bu Business ess Fi Firms +% Term Bu Business Lo Loans B% e"ol"ing Credit Financing C% Long-Term Pro8ect Loans 3% Loans Lo ans to to *uppor *upportt the the +c$u +c$uis isit itio ion n of /the /therr Busin Busines esss Firm Firms9 s9Le Le"e "era raged ged Bu# Bu#out outss +nal +nal# #,ing ,ing Busi Busine ness ss Lo Loan an +ppli pplica cati tion onss +% ost o st Com Commo mon n *ou *ourrces ces of Loan oan epa epa# #ment ent B% +nal +nal# #sis sis of a Busi Busine ness ss Borr Borrow ower er;s ;s Fina Financ ncia iall *tat *tatem emen ents ts 1% &mport portan antt Bal Balan ance ce *hee *heett Com Compo possiti ition at atios ios a% Percentage Co Composition of of +s +ssets  % Percentage Composition of Total Total Liailities and 6et 2orth

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Chapter 17 - Lending to Business Firms Fi rms and Pricing Business Loans

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