Types of Institutional Credit Arrangement.DOC

海量免费资料尽在此Types of Institutional Credit ArrangementDescription/securityTime PeriodInterest rateFeesDescription/ConditionShort-term Unsecured Credit ArrangementShort-term LoansRevolving CreditUnsecured or secured, NegotiableNegotiableNegotiableCovenantsFormal contractLine of CreditInformal arrangementNegotiableNegotiableNoneConditions in letterShort-term Asset-Based Credit ArrangementCollateralized LoansInventory or accounts NegotiableNegotiableNegotiableCovenants, recourse onReceivable pledged asbad accounts, lien on assets, etc.Security in bilateralContractWarehouse ReceiptsInventory placed withNegotiableNegotiableNegotiableCovenants, recourse onThird party warehousebad accounts, lien on assets, etc.And receipts used asCollateralOther CollateralSecurities, personalNegotiableNegotiableNegotiableCovenants, recourse onAssets of firmbad accounts, lien on assets, etc.officialsLong-Term Unsecured Credit ArrangementsTerm LoansBilateral contractNegotiableNegotiableNegotiableCovenantsBetween borrower andLender or lenders,Can be revolvingDebenturesPrivately placed orNegotiableNegotiableNegotiableCovenantsPublicly offered debtInstrument withFormal indentureContractLong-Term Secured Credit ArrangementTerm LoansBilateral contractsNegotiableNegotiableNegotiableContained in loanBetween borrower and agreementlender or lendersTypes of Conditions and Restrictions in Credit AgreementsCONDITIONPURPOSEEFFECTPrepayable or CallableCredit agreement can beFlexibility to borrowerGrant borrower an option terminated by borrowerto control costs of financingwith noticeDue on Sale/AssumableDebt payable if collateral Provides borrower withOption that can be sold or obligation isflexibility in dispositionvaluable to borrower orassumedof assetsbuyer of assets used as collateralRestrictions on production and Investment ActivityRestrict borrower抯 ability Control risks to lenderRequires monitoring ofto change business activities,affecting the value ofborrower抯 activitessubstitute assets for credit arrangementoriginal collateralRestrictions on Payment of Dividends or CashRestrict ability ofControl risks to lenderRequires monitoring ofborrower to take cash andborrower抯 activitesuse for purposes notanticipated by creditRestrictions on Future borrowingLimits ability of borrowerPrevents impairment ofRequires monitoring ofto issue further debtvalue of credit borrower抯 activitesinstrumentsarrangement by dilution of claimSinking FundsMandatory payments ofProvide market for debtRequires monitoring ofprincipale according toinstruments, reduce riskborrower抯 activitesscheduleof default upon maturityReporting RequirementsMandatory reports onProvide ability to monitorRequires monitoring ofborrower抯 financialand control financialborrower抯 activitesconditionperformance of borrowerTYPES OF FEES COLLECTED IN INSTITUTIONAL CREDIT ARRANGEMENTTYPE OF FEEFUNCTIONS PERFORMEDHOW CHARGEDOrigination FeesCredit analysis feeObtain credit checks,Points, explicit fees paidFinancial data, analyzeby borrower for otherDatacredit participantsDocumentation feesWrite, file and distributePoints, explicit fees paidContracts, record liensby borrower for otherCredit participantsAppraisal feesAssess value of collateralExplicit fees paid by borrowerfor other Credit participants,continuing compensation interms of interest ratespreadServicing FeesCollection and processingRecord payments keepcontinuing compensation Of paymentstrack of payment due andusually in terms of interest Timeliness of payments,rate spreadProvide necessary reportsOf balances and dueAmountsContract enforcement feesAccount for value ofInterest rate spread, feesCollateral and contractpaid by other creditRequirements, assureparticipants in terms ofConformance with agreed-reduced interest paidUpon ratios and other covenantsSelling FeesCommissions for sale of Find buyers and makeUsually percent ofPapermarketproceeds or bid/ask spreadCommitment Fees/Compensating BalancesCompensation for readinessAdvance funds against lineEither a fee based onTo advance credit withoutof credit when borrowerunused portion of line orNoticerequestsa minimum collected balancePrepayment/Cancellation FeesCompensation forCompensate investor forUsually percent of loanPrematurity repaymentloss of investment atamount outstanding at timeOf creditagreed-upon rateof prepayment or