Corporate Loans Funding Industrial Growth

Corporate Loans Funding Industrial Growth

Corporate Loans - Funding Industrial Growth
If individuals thought that they were the​ only ones who had the​ use for loans,​ then corporate loans will show them that they are incorrect .​
The corporates,​ who are deemed to​ have a​ large surplus of​ cash,​ too find themselves at​ the​ mercy of​ the​ loan providers (though not in​ the​ strictest sense of​ the​ word).
The use for corporate loans may emerge out of​ two reasons .​
Firstly,​ there maybe a​ shortage of​ cash and the​ loan is​ required to​ substitute the​ cash shortage .​
Secondly,​ they feel that the​ cash balance will find more productive uses if​ the​ task at​ hand is​ accomplished with a​ loan .​
The position of​ the​ corporates is​ not as​ vulnerable as​ that of​ ordinary individuals,​ when it​ comes to​ getting corporate loans .​
Because of​ an​ increased bargaining power,​ corporates are able to​ grab a​ much better deal than individual borrowers .​
Finance is​ the​ lifeblood of​ any business .​
Therefore,​ while it​ will be prudent not to​ make an​ injudicious use of​ corporate loans,​ it​ will neither be advantageous to​ starve the​ business of​ the​ much needed capital .​
Corporates risk its capital by taking business decisions- the​ grounds for profit .​
The risk taking capacity is​ severely stunted in​ the​ event of​ shortage of​ capital .​
a​ stunted risk taking capacity has its repercussions on​ the​ future of​ the​ corporate house.
Finding it​ too shocking to​ digest .​
This is​ however true .​
Shortage of​ funds was particularly behind many corporates not being able to​ complete assignments on​ time or​ not up to​ the​ quality standards stated.
Corporate loans come in​ a​ variety of​ forms .​
In this article we shall discuss about some of​ the​ most important corporate loans that businesses are making use of​ in​ the​ UK.
· Real estate financing:
Offices and factories are an​ important asset for the​ enterprises as​ all operations are conducted from this place/places .​
Banks and financial institutions finance the​ construction or​ purchase of​ an​ already built premise through real estate financing .​
Corporate loan of​ this form is​ similar to​ what is​ known as​ a​ mortgage .​
The important loans that are offered under real estate financing include land loan,​ property development loan,​ bridging loan for corporates and banker’s guarantee.
· Performance bonds and guarantees:
Larger enterprises have to​ show that they are credible enough to​ get access to​ certain contracts .​
Corporate loan providers offer to​ guarantee the​ trustworthiness of​ the​ enterprise by issuing letter of​ guarantee,​ letter of​ indemnity,​ banker’s guarantee and similar other documents pertaining to​ the​ credibility that a​ business house enjoys in​ the​ market .​
This becomes particularly important in​ modern day economy where business is​ conducted on​ a​ global scale .​
Businesses may be well known on​ a​ regional scale but globally it​ might be a​ minuscule .​
With the​ corporate loan provider vouching for the​ business,​ the​ standing of​ the​ business house greatly improves.
· Stocks and shares financing:
This facility is​ available for all types of​ enterprises whether private or​ public .​
Businesses can use the​ service at​ any stage of​ their life .​
Shares or​ unit trust,​ initial public offers (IPOs) and substantial shareholders are some of​ the​ methods used for financing business plans.
· Debt capital market products:
The method is​ again for public as​ well as​ private sector enterprises .​
This includes tasks such as​ underwriting or​ managing a​ variety of​ debt instruments .​
These can be suitably used for medium and long term financing .​
Some of​ the​ important components of​ these methods are syndicated loan facility,​ fixed rate bonds,​ floating and variable rate notes,​ and commercial papers .​
Syndicated loan facility can reduce dependence on​ one particular lender .​
The loans may be structured to​ meet the​ borrowers financial needs in​ the​ best possible manner.
The corporate loan will be repaid in​ the​ manner decided by the​ entrepreneur .​
The cash flows are the​ principal source of​ funding the​ repayment of​ corporate loans .​
Banks and financial institutions demand a​ guarantee or​ collateral from the​ borrower as​ a​ show of​ commitment to​ the​ project .​
Different lenders may define the​ clause of​ collateral amount and form differently .​
As with the​ loans offered to​ the​ individuals,​ corporate loan providers have a​ lien on​ the​ collateral offered .​
This will be exercised only when the​ loan has not been paid in​ full.
The dreams you​ ever saw for your business that were shelved because of​ the​ lack of​ adequate finance get a​ platform through which to​ be realised .​
Corporate loans provide this platform .​
Whatever be the​ needs of​ the​ business,​ from providing a​ continuous source of​ working capital to​ business expansion needs,​ corporate loans will always be useful.

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