In modern conditions, bank lending is becoming an important tool aimed at improving the quality of life of the population and the development of business entities. Indeed, the activities of credit institutions allows you to get what you want here and now, even when the required amount is missing. Often, bank lending paves the way for the implementation of government programs that have important social significance for the region.
Since any loan is based on the principle of payment, then any bank charges interest on the body of the loan. There is a relationship between the loan term and the interest rate, that is, the longer the loan period, the higher the percentage. According to this criterion, short-, long- and medium-term loans can be distinguished. Of course, to get a long-term loan, good reasons and goals will be required, since the risk of non-repayment of funds increases. That is why the interest on such loans is much higher than all others.
Depending on the purpose and purpose of use, consumer, trade, budget, agricultural loans are distinguished. Among individuals, the most common type of loan is consumer, because to obtain it does not require additional action. As a rule, an agreement between a particular store and a bank is concluded for this purpose, so it will be quite simple to get a loan to a client.
Bank lending is risk-based, and the task of the management of this kind of organization is to develop measures to reduce this indicator. Any loan is issued under a certain security, confirming the solvency and financial stability of the client. Such security may be a guarantee, pledge or guarantee. The property of an individual or fixed assets of an economic entity is often taken as a pledge. The guarantee assumes the presence of a third party in the transaction who assumes responsibility in case of non-return of funds to fully or partially pay the debt of the borrower. Unsecured can only be a loan issued for consumer purposes.
Bank lending to legal entities is usually carried out in the form of a constantly revolving credit line. That is, the bank enters into an agreement with the business entity on the provision of funds to it at the first request and in the required amount until the established limit is exhausted. After that, the borrower has the right to extend the credit line, having previously agreed upon this with his bank. In our country, this method of compensating for a temporary lack of financial resources in production activities is only gaining momentum and is in the process of its development.
Bank lending to individuals allows as soon as possible to realize the plan, even in the absence of savings. Unlike the practice of foreign countries, domestic banks work more with legal entities. This is due to distrust of the entire banking system on the part of the population as a result of numerous bankruptcies in crisis periods.
One can note the most important advantage that bank lending has. It consists in the right to freely choose a client, the system for issuing and paying on a loan. In addition, there is no need to deduct taxes on the loan amount. And the interest rate can be considered as a completely fair reward for the riskiness of the operation. Of particular importance is lending to legal entities, since it supports the uninterrupted operation of the enterprise, because due to borrowed funds, a temporary shortage of financial resources is filled.