Bank Operating Line of Credit and Letters of Credit

Banking - Business Loan Application

Operating Lines of Credit and Letters of Credit

You are probably wondering what a series on business banking essentials is doing on a natural health website.

Well, stress caused by financial worries will eventually adversely affect your health. Many business owners operate under constant financial pressure, and this series on commercial banking and commercial finance will arm them with the knowledge that they need to deal confidently with diverse business situations, and with their bank managers. Knowledge is comforting, it is the fear of the unknown that is stressful.

How can I help you? I obtained my Chartered Accountant designation (I'm retired now) in Australia. Upon moving to Canada, I worked for a wholly owned Canadian subsidiary of an American bank. Over time, I rose to become the Senior Vice-President responsible for the commercial finance division. This division granted flexible operating lines of credit, which included letters of credit for importers. In this career, I encountered numerous different types of businesses including trading, manufacturing and importing.

This is not intended to be a detailed accounting or banking course. I have put together the essential information you need in order to give yourself the best chance of succeeding in your business. I shall tell you what your bank manager would like to hear from you at your meetings. I shall tell you the early warning signs that your business needs positive action.

These comments are not for retail business; they apply to wholesalers, importers and manufacturers.

To cover the vast amount of banking information, even in thumbnail format, I shall break it down into various segments. Some will apply to your business, others may not. I am intentionally phrasing the segments in very simple layman's terms. I would advise you to discuss my advice with your accountant, or even your banker, before you decide to act on it.

This first segment deals with the initial loan application. It is assumed that you are applying for an operating line of credit, which may, or may not, include letters of credit. The actual loan within the line of credit will fluctuate at different times, depending on the cashflow, but the bank will put an upper limit which you cannot exceed without special authorization. The limit of the operating line of credit is determined by the bank after evaluating various aspects of your business, including your equity in it.

There is certain basic information that the financial institution requires in order to make the decision to finance your business. You must come to the appointment with the bank armed with this information, ideally accompanied by your accountant who prepared the information package.

" Financial Statements for the past three years

" Pro forma financial statement for the year to date

" Cashflow projections for the current year

" List of aged accounts receivable

" List of aged accounts payable

" Summary of inventory

From the above documents, the bank will ascertain whether your business was profitable in the past, and whether it appears to be profitable this year.

The cashflow projections will show how high the financial involvement will peak at, and how well the loan will be collateralized at any given time.

The accounts receivable list will disclose the quality of the customers and whether a significant percentage of them is delinquent.

The accounts payable list will reveal whether your business is up-to-date with its payments to suppliers.

The inventory summary will show the nature of the inventory and give an indication of whether it can be sold readily.

In addition to examining the above documentation in detail, be aware that a credit check will be done on the business to ascertain if there is any outstanding litigation, and as to its creditworthiness.

Knowing all this, be sure to have satisfactory explanations for any aspects that may appear detrimental to the bank.

It is important to keep in mind that the ideal customer for an operating line of credit, as far as the bank is concerned, is one who:

" Is profitable

" Needs the credit to finance profitable growth

" Does not require too high a loan/equity ratio

" Has adequate collateral to cover the loan at all times

" Has collateral that can be liquidated easily

" Has excellent credit rating

Your strategy? When making the loan application:

" stress the good value of the assets that support the equity of the business.

" Point out that the inventory is current, or can easily be sold.

" Explain that your accounts receivable are up-to-date and that delinquent receivables have been provided for.

" If you have unencumbered fixed assets, point out that there is additional collateral for the bank in them.

" Advise the bank that you have adequate fire insurance to protect the assets, and personal life insurance that could be used to protect the bank, if necessary.

" Recognise that the banker looks to collateral to repay the loan if the business fails. The banker is not really interested in intangible assets, such as goodwill, even though they could be very valuable.

Cheap Travel

How to Find Cheap Travel


Report this article if you suspect it is not original content, is in violation of our Editorial Guidelines or our Author's Terms of Service.Student travel has come a long way in the past few decades. It is no longer considered a rarity. Gap years, student electives abroad and cheap summer holidays in distant places, have become part of the generally life-enriching experience that is now considered synonymous with the student status. (Frost F et al., 1999)
The current financial climate, with many students having to rely on student loans, parental support, holiday jobs or personal savings for their financial fluidity, largely dictates and limits just what can be achieved in this regard and there are a number of ploys and strategies that are commonly used to make the money go further or, to look at it another way, to allow the same money let the student go further! (Reisinger Y et al., 2004)
We can start by taking an overview of the situation and dividing up the travel costs into those that are necessary to arrive at a destination and those that are necessarily incurred to move around once the student has arrived.

Private Access Consolidation

Private Access Consolidation

Program Guidelines and Eligibility
Students must have all private loans through The Access Loan Program
Loans must be in repayment status
$7,500 minimum loan .

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amount
Loans must be under 45 days delinquent
Other Product Features
Term may extend up to 30 years
No Grace Period - payment begins immediately upon consolidation
No pre-payment penalty
Interest Rate CalculationInterest rate varies quarterly, based on the same formula as the loans being consolidated
Fees1% Loan Fee is added to the principal balance at disbursement
Repayment Options
Level: Equal monthly payments of principal and interest for the life of the loan
Select 2: Interest only payment for first 2 years of repayment followed by principal and interest for the balance of the loan term

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Select 5: Interest only payment for first 2 years of repayment, followed by 3 years of partial principal and interest payments, then full payments
Modified Graduated Repayment Schedule: Payments for first 12 months are equal to 50% of the level installment; the next 12 months are equal to the 31-day interest accrual at the current balance; beginning with the third year, payments return to level.
Grace period: None
Loan Repayment
Repayment begins immediately upon disbursement
No prepayment penalties
Repayment TermsBased on the total loan balance being consolidated:$7,500 - $19,999 = 25 years$20,000 and above = 30 years

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Loan Disbursement Paid to creditor
How to Apply:
Call 1-866-876-3613 to speak to a counselor who will answer your consolidation questions and complete your application over the phone.
What Happens After You Apply:
After you have reviewed the application, sign it, choose your repayment option and return it to AES Graduate and Professional Services.
AES Graduate and Professional Services will process your application within 30-45 days of receipt.
When your private loans are paid in full, through consolidation, a disclosure statement and repayment schedule will be forwarded to you.
$7,500 minimum loan amount
Loans must be under 45 days delinquent
Other Product Features
Term may extend up to 30 years

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No Grace Period - payment begins immediately upon consolidation
No pre-payment penalty
Interest Rate CalculationInterest rate varies quarterly, based on the same formula as the loans being consolidated
Fees1% Loan Fee is added to the principal balance at disbursement

Repayment options

Level: Equal monthly payments of principal and interest for the life of the loan

Select 2: Interest only payment for first 2 years of repayment followed by principal and interest for the balance of the loan term

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Select 5: Interest only payment for first 2 years of repayment, followed by 3 years of partial principal and interest payments, then full payments
Modified Graduated Repayment Schedule: Payments for first 12 months are equal to 50% of the level installment; the next 12 months are equal to the 31-day interest accrual at the current balance; beginning with the third year, payments return to level.

Grace period: None

Loan Repayment
Repayment begins immediately upon disbursement
No prepayment penalties
Repayment TermsBased on the total loan balance being consolidated:$7,500 - $19,999 = 25 years$20,000 and above = 30 years
Loan Disbursement Paid to creditor
How to Apply:
Call 1-866-876-3613 to speak to a counselor who will answer your consolidation questions and complete your application over the phone.
What Happens After You Apply:
After you have reviewed the application, sign it, choose your repayment option and return it to AES Graduate and Professional Services.
AES Graduate and Professional Services will process your application within 30-45 days of receipt.

Love of Your Life !!

When your private loans are paid in full, through consolidation, a disclosure statement and repayment schedule will be forwarded to you.
$7,500 minimum loan amount
Loans must be under 45 days delinquent
Other Product Features
Term may extend up to 30 years
No Grace Period - payment begins immediately upon consolidation
No pre-payment penalty
Interest Rate CalculationInterest rate varies quarterly, based on the same formula as the loans being consolidated
Fees1% Loan Fee is added to the principal balance at disbursement
Repayment Options
Level: Equal monthly payments of principal and interest for the life of the loan
Select 2: Interest only payment for first 2 years of repayment followed by principal and interest for the balance of the loan term
Select 5: Interest only payment for first 2 years of repayment, followed by 3 years of partial principal and interest payments, then full payments
Modified Graduated Repayment Schedule: Payments for first 12 months are equal to 50% of the level installment; the next 12 months are equal to the 31-day interest accrual at the current balance; beginning with the third year, payments return to level.
Grace period: None
Loan Repayment
Repayment begins immediately upon disbursement
No prepayment penalties
Repayment TermsBased on the total loan balance being consolidated:$7,500 - $19,999 = 25 years$20,000 and above = 30 years
Loan Disbursement Paid to creditor
How to Apply:
Call 1-866-876-3613 to speak to a counselor who will answer your consolidation questions and complete your application over the phone.
What Happens After You Apply:
After you have reviewed the application, sign it, choose your repayment option and return it to AES Graduate and Professional Services.
AES Graduate and Professional Services will process your application within 30-45 days of receipt.
When your private loans are paid in full, through consolidation, a disclosure statement and repayment schedule will be forwarded to you.

Students-Loan a money- JUST IN TIME !!!!!

Consolidating your student loans today could lower your monthly payment by as much as 50%.

Benefits of consolidating your loans:

Lock into a fixed interest rate
Lower your monthly payments
Have only one bill to pay
No application fees or credit checks
No co-signer is needed
Experienced Customer Service Staff

How does consolidation work?

A federal consolidation loan combines all of your existing eligible federal education loans into one new loan, with an interest rate that won’t change. Your loan immediately becomes easier to manage because you have only one company to talk to and one monthly payment to make.
Federal student loan consolidation is not a debt counseling service and will not hurt your credit. In fact, consolidation can be a smart way to manage your student loan debt. Consolidation can reduce your monthly payments by up to 50% by giving you more time to pay off the loan.
The consolidation processThe consolidation process takes approximately 6-8 weeks.
You submit your consolidation application.
We process your application and contact your existing loan holders, requesting pay-off.
Once your information is returned from your loan holders, your old loans are paid-off and the balances are transferred into one new loan.
We send you a “Truth In Lending Disclosure Statement” which outlines your new loan’s term, balance, and monthly payment amount.
We send your first billing statement for your consolidation loan.
During this time it is important that you continue to pay the student loan bills you receive.
When to applyAlthough there is no deadline to consolidate your loans, each year interest rates change on July 1st and can go up as high as 8.25%. Because the interest rate on a consolidation loan is based on the weighted average of your existing loans, it is best to consolidate now while the interest rates are lower.

Student Loan Consolidation

Consolidate Your Student Loans With Nelnet!

Consolidate your Federal student loans with Nelnet and get a low monthly payment with a fixed interest rate. Consolidating with Nelnet allows you to reduce your monthly student loan payment; and, with Nelnet's borrower benefits, you could reduce your interest rate and save thousands of dollars in interest over the life of your Federal Consolidation Loan.

What are the benefits to using a Nelnet Consolidation Loan to Lower Your Student Loan Interest Rates?Federal low-interest student consolidation loans still give you an excellent way to manage your student loan debt. By consolidating your student loan debt today you can get a lower monthly payment and a fixed interest rate. In addition to the ability to better manage your student loan repayment, the Nelnet Consolidation Loan offers you many other benefits.
Benefits of Nelnet Consolidation LoansYou relied on low-interest rate student loans to complete your education. Now, you may be faced with significant student loan debt and you should explore the many options afforded you as a borrower to repay your loans. When evaluating a low-interest student loan consolidation, you should consider the following features:

A fixed interest rate
Flexible repayment schedules
One lender, one payment
No fees or credit checks
Additional borrower benefits
Tax-deductible interest

Fixed interest ratesThe consolidation interest rate is fixed and is calculated by taking a weighted average of the rate on the federal loans you are consolidating, rounded up to the nearest one-eighth percent, not to exceed 8.25%

Stafford loans disbursed between July 1, 1998 and June 30, 2006 have a variable interest rate that resets every July. See below for current interest rates:
Stafford loans in grace or deferment - 6.54%

Stafford loans in repayment, including forbearance - 7.14%
Stafford loans disbursed on or after July 1, 2006 have a fixed interest rate of 6.8%

If you have questions about calculating your consolidation interest rate, please contact a Nelnet Loan Advisor. They will research your loan history and estimate your consolidation interest rate for you.
Lower monthly paymentsWhen consolidating your student loans, you can reduce your monthly payments by locking in a low fixed interest rate and extending your repayment terms. Extending your repayment terms helps reduce your monthly payment, but you need to be aware that the amount of interest you pay over the life of your loan may increase as well.
In addition, the Nelnet Consolidation Loan offers several borrower incentive programs that can reduce your payments even more!

You can enjoy:
Choose from one of two borrower benefits: When you complete and e-sign your application online, you may choose either a one-time 3.33% principal balance reduction after 30 initial, on-time payments or a 1% interest rate reduction after 36 initial on-time payments. If you submit your application through the mail, you will qualify for a one-time 3.33% principal balance reduction after 30 initial on-time payments. Please note: Submitting your application online using our e-signature process will expedite the processing of your loan.
A 0.25% interest rate reduction for auto-electronic payments (KwikPaySM)
The Nelnet Private Consolidation LoanLike the Federal Student Consolidation Loan, there are many benefits to be realized when you refinance your private student loan payment (s) and consolidate it into a Nelnet Private Consolidation Loan.Interest rates as low as the current Prime Lending Rate.
No origination fees, no early repayment penalties – Making a smart financial decision has never been easier. You simplify the way you repay your private student loans, and even extend the terms of those loans to ensure you monthly payment does not leave you scrambling for cash each month.
Lower cost solution than other forms of financing– a Private Loan Consolidation from Nelnet may just be the most economical type of financing you can employ to pay back your private student loan debt. Our Loan Advisors can help you determine approximately what your monthly savings might be, and assist you in determining if a Nelnet Private Consolidation Loan is the best choice for you.

Competitive rates – Nelnet, a leader in the Education Loan business can offer you competitive interest rates that when combined with extended terms, can significantly reduce your monthly private student loan payments. Since extending your term can increase the interest you pay over the life of your loan, Nelnet also offers the benefit of letting you decide how quickly you want to pay off your education debt. There is no penalty for early repayment. Plus, if you provide a co-borrower to your Nelnet Private Loan application, there is an excellent chance your interest rate can even improve over the rate you would qualify for alone.
Loans available from $5000 –

Nelnet recognizes that your education may be one of your most important investments, and one of your most costly. Our Private Consolidation Loan Program gives you the ability to combine most if not all of your loans into one easy payment.
Interest rate reduction of .5% after 48 initial on-time payments – When you have completed 48 initial on-time payments, Nelnet rewards you with a further reduction in your interest rate. The money you save can be used toward paying back your loan sooner.
.25% interest rate reduction whey borrowers sign up for KwikPay – If you elect to make your monthly private consolidation loan payments electronically, you can save more money.
Apply over the phone, or online – When submitting applications for both FFELP and Private consolidation loans, the process is easy and you can do it all online, 24 hours a day 7 days a week.