Category: L

Under the terms of a loan agreement, net amount a lender gives to the borrower.

Illegal lending extortion. Usury interest rates, bodily harm, scare tactics, repeated threats are signs of such extortion.

Period from loan application’s receipt through loan’s closure measured as a series of action steps tracing the entire life of the loan. Steps include loan acceptance, posting of loan on lender’s books, track of loan pay down, eventual mailing of written notice of loan closure to the borrower.

Bank officer presentation to the loan committee of a loan application and borrower’s credit-worthiness as a senior loan officer report.

Loan’s documented interest rate. the purpose and type of loan dictates the loan rate.

Bank management committee comprised of senior managers and experienced loan officers. Evaluates and decides some loan applications. Normally considers loans exceeding the forwarding loan officer’s lending authority or that require special attention based on an applicant’s credit history or other factors. The committee reviews an applicant’s financial statements and credit information to stay in compliance with the bank’s lending processes and legal obligations. The current economic trends strongly influence the loan decision.

Sharing one or more loans among a lender collective. Allows the group to manage loan package to big for any one of them alone. Known as participation loans or syndicated loans, this collective included a hundred banks or more all around the world. Also known as loan syndication or participation financing.

Annual required cash flow needed to service a loan obligation’s interest and principal. Calculated as a percentage dividing the actual debt repayment value by the outstanding principal.

loan agreement boundary as a typical restrictive, negative covenant. Restrictions such as not incurring more debt, no executive salary increases, no bonuses, and the like are examples of limiting the freedom of a borrower or company’s management.

Two entities make this type of swap or trade from a loan’s credit exposure as a derivative. Sometimes an underlying entity’s credit quality is the betting point used. Used as a hedge against credit exposure that a buyer can have, or used to obtain credit exposure for a seller.