Question

Assume that you are a loan officer. You are considering making a loan to a retail company–any such company that is actually located near your home. You want to use as collateral as many of the company’s assets as possible. For this assignment, you must: research the state records to see whether there are outstanding security interests in any or all of the company’s assets, and decide how much you would be willing to loan, by estimating the approximate worth of company assets that are not already securing another creditor’s loan.

Answer 1

A retail company needs loan for its working capital or purchasing fixed asset or for expansion of his business. For calculating of companies credit worthiness first of all we should check present obligation of the company towards its outstanding Liabilities.If there is any Outstanding Liability is There? If yes check Frequency of payment of Loam EMI And check interest rate on which loan has been taken. We should ensure that the company is not the defaulter of Repaying of any of its past liabilities. Credit worthiness of the company should be strong . Performance of the business of the company should be in stable position.

After checking all the eligibility criteria and evaluating creditworthiness and Eligible amount of the company we should Consider its collateral for the security of loan , if the loan is for the purpose of acquiring new property or asset for the company then collateral will be the new asset or property and if the loan is for its working Capital requirement collateral security can be company s existing asset which have market value more than or equal to the amount of loan. Interest rates of the loan for working capital requirements will be higher.

Amount sanction to the company will be the amount of its credit eligibility criteria. As per standard Rules and norms Loan can be sanctioned to the borrower Upto 80% Of the value of the asset.