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Is Mortgage The Only Factor Bank Considers When Granting Loans?
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[QUOTE="Caramelle, post: 197822, member: 150"] A mortgage is not the only way for a business to obtain loans from banks. Being a bank's depositor or account holder creates a business relationship between the bank and the business. A business can leverage the relationship with the bank in many ways. One is by securing a non-collateralized credit line with the bank. Once granted, the business can use that credit line to borrow money when needed. The loan is subject to interest but it is quite useful in funding big projects where the company can expect a return that is several times more than the interest that will be incurred on the loan. A business may also use purchase orders or invoices as collateral to obtain funds from banks and other institutions. A firm may assign accounts receivable to obtain the needed funds. Either the bank or the business performs the collection process with or without the knowledge of the customer. Either way, the bank will usually hold a certain percentage of the invoice to cover its charges. For example, if the accounts receivable amount is $100,000, the financial institution may only grant 75% of the amount, or $75,000, and withhold the remaining 25% until the full invoice amount is collected from the customer. [/QUOTE]
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Is Mortgage The Only Factor Bank Considers When Granting Loans?
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