Characteristics and form of short-term financing

Characteristics and form of short-term financing

1. credit line. Credit lending limit is between the borrower and the Bank formal or informal agreement allows the borrower to the Bank loan ceiling. If the borrower in excess of the prescribed limit continues to borrow from banks, banks stop processing loans. 2. the revolving credit agreement. Revolving credit agreement refers to the Bank from a legal commitment to provide enterprise does not exceed a certain maximum amount of a loan agreement. The period of validity of the agreement, as long as the amount which the enterprise does not exceed the ceiling, banks are required to meet the borrowing requirement at any time. Enterprise access to revolving credit agreement, usually to the unused portion of the credit to the Bank a commitment fee. 3. compensating balances. Compensating balance refers to the banks require the borrower to remain in the Bank under the loan limits or the actual amount of borrowing a certain percentage (usually 10%_20%) to calculate a minimum deposit balance. BACK
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