Financial Credit Types and Loans Overview

Crop loans are repaid before the harvest time.

Commodity loans are used for financing the production of seeds and fertilizers.

Financial institutions can serve as intermediaries for credit.

Commercial credit can only be granted by government entities.

The biggest sources of credit are the individuals and businesses with excess funds.

Loans for the purchase of raw materials are an example of commercial credit.

The maturity of a crop loan is not related to the crop cycle.

Intermediaries handle funds with expertise and prudence.

Bonds are essentially a loan in which the cash proceeds are provided by the issuers.

A corporate bond operates under the same principles as treasury bonds.

Equipment leaseback involves the owner selling their equipment to a finance company and leasing it back.

Commercial paper is a secured short-term certificate of debt issued by small businesses.

In a 'with recourse' transaction, the factoring company bears the risk of bad debts.

T-bills are always issued by large private corporations.

Bonds can be divided and sold in parts.

The responsibility for non-payment lies with the seller in a 'without recourse' sale.

A bank guarantee credit requires a recurring commitment fee irrespective of loan usage.

Letters of Credit ensure that payments to sellers will be received accurately and on time.

In the event of non-payment by a buyer, the bank will cover only a partial amount of the purchase.

A bank may require the borrower to sign an agreement regarding account collections held in trust.

The loan-to-value percentage is determined by evaluating the quality of the pledged accounts.

Factoring involves the retention of ownership of accounts receivable by their original owners.

Corporate bonds are secured and available for any corporation regardless of their financial history.

The discount at which receivables are sold in factoring represents the gross profit for the seller.

A document becomes an instrument when it confers the power to transfer rights.

A credit application is an example of a credit instrument.

A deed of sale and a document are the same in legal terms.

Commercial documents cover all types of financial and non-financial transactions.

A promissory note can be made more complex by adding interest rates.

Chattel mortgages are considered credit documents, not instruments.

The time frame of a promissory note is uniform across all financial transactions.

Documents used in business are primarily classified as personal and private documents.

Foreclosure results in the lender becoming the permanent owner of the property immediately after the auction.

A Disclosure Statement is only necessary for credit transactions that do not charge interest.

A letter of credit can be transferable, allowing the beneficiary to assign the right to draw to another entity.

The auction sale of a foreclosed property is advertised in a specialized financial magazine.

After one year of the foreclosure auction, the ownership of the property is transferred to the highest bidder if the borrower does not redeem it.

Banks typically charge a fixed amount for issuing a letter of credit, regardless of its size.

The borrower remains the legal owner of the property even after it is sold at auction during the foreclosure process.

The lender must provide the borrower with an accurate account of the costs associated with the credit.