Continuing on with our rate series, let’s explore the relationship between risk and rates. Risk is one of the largest factors affecting the rates you pay. In fact, nearly all lending rates begin at whatever the Federal Funds Rate is, and are then adjusted upwards based on risk and lender overhead. But risk is the big one, and… Read More »
I’ve been writing about bank loan restrictions and clauses for a few weeks now. We went over blanket liens and compensating balances, and now we’re going to talk about maybe the scariest one of all: annual requalification. If you thought the bank saying “yes” when they gave you the loan was the end of them looking at your… Read More »
Next up in our bank loan restrictions comes compensating balances. And it’s something nearly all banks use when loaning a business money for equipment financing. A compensating balance is when a bank requires a business to keep a certain balance amount in an account with them. This balance amount is typically 80% of the equipment loan. The key… Read More »
We’re talking about lending restrictions in 2024, and first up is the notorious blanket lien. First let’s talk about liens in general. In business/lending, a lien is when a lender claims the right to property belonging to the borrower until the debt owed by that borrower is discharged. The mainstream talk on liens is usually related to vehicles.… Read More »
In answering the question “is lending more restrictive in 2024?”, the answer is twofold. Yes, many lenders – especially banks – have tightened credit requirements overall. But what I’d like to talk about more are the restrictions that almost all banks use for business lending. I haven’t talked about these in a few years here, so 2024 seems… Read More »