| Name |
Features |
Benefits |
| One-time urgent secured loans |
Their peculiarity lies in the specific target application directly issued on bail (Andreeva, 2016). This type of loan can be formalized by an individual loan agreement, where the amount and purpose of the loan transaction are prescribed. Directly in order to make a decision on the issuance of such a loan, the borrower needs to provide each time the necessary set of relevant documents. Loans with a one-time nature of the provision are issued without prior credit histories. Such lending is risky for bank institutions, as there are no clear guarantees indicating that the loan can be repaid. That is why a banking institution sets a maximum interest rate on it. |
The positive aspects of this type of loan include the fact that the volume of its issuance depends entirely on the project for which it was issued, including a high-tech one (Bashanova, 2016). |
| Open line of credit |
An open credit line consists of a specific obligation to provide a specific loan for a specific time. The difference from the ordinary type of loan is that the client can receive money in parts or within the specified time. An indispensable condition for such a loan is a pre-agreed obligation of the parties. The most common difference between this loan is a permanent relationship between the lender and the borrower. In practice, an open credit line is opened for regular customers who have a positive reputation in the banking market. |
The positive side of an open type credit line is the long-term use of funds; you do not need to constantly come to a banking institution. This allows you to regulate and control tranche limits, which will help to avoid unfair transactions. |
| Overdraft |
Overdraft is the expenditure of funds from a debit card account in excess of the balance on the account, that is, lending to a client’s account, which is allowed by the bank in order to replenish a personal bank account of an individual for a short period of time. The ability to receive an overdraft loan is made out by a loan agreement, which has a certain period of validity, as a rule, it is one or two years. The main feature of the overdraft is the obligatory repayment of the loan at least once a month, multiple renewal during the entire lending period, interest accrual only on the actual loan debt. |
Overdraft has a number of special advantages. The main advantage is that at any time the bank's client can borrow the money that is missing from him within the limit, and you can borrow money an unlimited number of times. Since overdraft is an inappropriate loan, therefore, credit resources can be spent on any purpose. Interest on overdraft is calculated only on the actual amount of the overdraft. If the overdraft has not been used, then no interest is accrued. When overdraft, the loan amount is constantly renewed, and there is no collateral or guarantors. This type of loan, such as overdraft, allows you to make important and necessary payments, even at the moment when payments to the current account cease. Overdraft allows entrepreneurs to avoid delays in cash flow, and the bank can increase the limit amount by several times for holders of salary cards. At any time, the client can refuse this service. |
| Loans based on a bill of exchange |
A bill of credit is a type of loan in which the settlement between participants in credit relations is carried out using a special type of securities - bills of exchange. Securities should include the obligation of the debtor to the creditor to pay a specific amount of money in a certain period of time. A promissory note loan is issued by a report form and may be subject to sale on the securities market, and may also be mortgaged to a banking institution. |
The interest rate lending is a plus for lending with a bill; it is usually different and slightly less than the rates for other lending programs. Usually this rate is not more than 10 percent.For the drawer also a significant advantage is the ability to take a deferral of payments. And if you take into account that the seller of credit products has virtually no risks, then the benefits of this type of lending becomes obvious (Loaning Supplementary Benefit and Strikes, 2016). |
| Syndicated loans |
A syndicated loan is provided to the borrower by two or more lenders participating in the transaction in certain shares under a single loan agreement. Using a syndicated loan type, you can get a fairly large amount of money to finance a large project. One banking institution cannot meet the requirements for such a loan. Only banking associations will cover this need entirely. The risk per borrower is also significantly reduced (Kokodey et al., 2018). |
Upon receipt of a loan, a specially formed consortium group takes over the paperwork. It stipulates the basic requirements for the future borrower, and also distributes the main risks. This approach allows you to get a loan much faster and achieve results in obtaining it. Debt servicing labor costs are also reduced, because the banks participating in the syndicated loan accept equal conditions. A syndicated loan means access to a large loan, which one bank simply cannot issue. In a syndicated loan, you can almost without restrictions get the necessary amount of capital for the development of the enterprise or the implementation of large state programs. Also, when applying for such a loan, the terms for repayment of the debt are agreed in advance and agreed upon. In this case, you can always get a multi-currency loan or change the loan currency during the term of the contract. When applying for a syndicated loan, you do not need to spend money on a lot of additional payments (taxes, commissions, and so on). |
| Factoring |
Factoring is a banking service for suppliers who work on a deferred payment basis. Factoring operations allow lenders not to accumulate receivables in the short term and plan cash flows, and the bank - to make a profit (Sungyoon, 2007). A factoring organization or bank pays money to its client for products sold instead of the buyer, and he transfers the right to claim the receivable to the agent. As a result, both parties get their own benefit: the creditor gets real money, and the bank earns from operations - part of the debtor's debt plus commission (Sidunova et al., 2017). |
Factoring does not require collateral, the amount of financing is unlimited, and the amount of financing can increase as customer sales increase. When factoring, financing is provided for the period of the actual deferred payment (commodity loan), and the period for receiving funds from the moment of submitting the application is significantly shorter. The financial agent does not analyze the financial and economic activities of the client, and the amount of financing is paid to the factor not by the client, but by his debtors. It is also worth noting the savings on unjustified costs associated with obtaining a bank loan. |
