Entrusted loan

Definition

Entrusted loan refers to the client provide legitimate sources of funds, commissioned by the business bankAccording to the client to determine the loan object, purpose, amount, term, interest rateEtc.To extend, supervision and assistance to recoverLoan business. Clients include government departments, enterprises and institutions and individuals.

The application conditions

The principal and the borrower shall be by the Administration for Industry and Commerce (or authority) approved the registration of enterprises (thing) enterprises, other economic organizations, individual industrial and commercial households, or with full civil capacity of natural persons; has open settlement accounts in banks; principal funding sources must be legal and discretionary rights for entrusted loan; alone must bear the risk loans; the need to pay taxes in accordance with the relevant requirements of the State Bureau of Local Taxation, and cooperate with the trustee for the collect and remit tax payment; comply with the business of the bank which he asked.

The term, interest rates

Entrusted loans, byClientAccording to the use of the loan, the borrower's ability to repay loans or according to the specific circumstances to determine;

The entrusted loans, the entrusted loan interest rate was commissioned by both parties agreed, the lending interest rate and floating rate but can not exceed the maximum specified by the people's bank. Since 2004, commercialBank loansThe interest rate floating range extended to (0.9,1.7), namely the commercial bank to a customer's loan interest rate lower limit for the benchmark interest rate multiplied by the coefficient 0.9 lower limit, limit of the benchmark interest rate multiplied by the limit coefficient of 1.7, financial institutions can be in accordance with the relevant provisions of the people's Bank of China in the people's Bank of China is to determine the floating rate.

Floating rate

The people's Bank of the existing provisions of commercial banks Chinese floating interest rate is: from January 1, 2004 onwards, in the formulated by the people's Bank of Chinese loans benchmark interest rate basis, commercial banks, city credit cooperatives loan interest rate floating range limit expanded to 1.7 times the benchmark interest rate loans, rural credit cooperatives lending rate floating range limit expanded to two times the benchmark lending rate the, financial institutions lending rate floating range lower limit of 0.9 times the benchmark lending interest rates remain unchanged. To one-year loan as an example, the current benchmark interest rate of 5.31%, expand lending rates interval, commercial banks, city credit cooperatives in the interval of 4.78% to 9.03% autonomous determine lending rates in accordance with market principles. The people's Bank of Chinese enterprises are no longer under the ownership, size determine the loan rates interval; the provisions otherwise provided by the State Council policy bank loans and loan interest rates are not rising.

Business process

The principal and reached the borrower financing consultation, determine lending rates, time factor.

The principal and the borrower offered in the business of BankSettlement accountIssued by the client, "power of attorney" to the business bank loans, and by the trustee and the borrower to the bank to apply for.

The bank accepts the client application, investigation and approval from the examination and approval, to meet the requirements of the customer accepts the entrustment.

Practical application of entrusted loan in cash in the pool

The Multi-National Corporation investment enterprises continue to increase, through centralized management of its headquarters in China capital of each sub company's demand has become urgent.Cash poolingManagement is a kind of cash management in Huaxing up technology, is used to optimize the interest and improve liquidity. However, a cash pool will lead to different legal entities account funds transfer, this transfer is not true trade background, the formation of inter company lending. In China, direct lending between companies is "General loans"The forbidden.

Cash pool practical operation mode is to use a form of loans to fund allocation within the group. Entrusted loan means a loan, to entrust the third party (commercial banks) management. The commercial bank shall not bear the risk of loan losses, only responsible for the client specified by the object or investment, the prescribed purposes and scope, reserved conditions (amount, term, interest rates and so on) to extend, supervision and assistance loan. Loans to be used isSteer clear of inter company loan banA method of.

The basic operating cash pool is,Set up a group of the cash pool account in the name of the headquarters of the company, through its subsidiary, entrusted loans to the headquarters, the daily timing will company funds to cash pooling account. During the day, if the subsidiary foreign payment account remaining sum is insufficient, banks can provide is limited to the existing headquarters capital position limit of the overdraft payment; the end of the day, the return of loan to the company headquarters, the system will automatically send cash pooling account funds allocated to the member companies to complement the overdraft account.According to the prior agreement, commissioned loan interest settlement in a fixed period of time, and through the bank interest allocation.

Exclude loans between the enterprises ban entrusted loans, make the enterprise become possible to effectively centralized cash management.

Entrusted loan external risk

At present, enterprises will be entrusted loans are widely used in the cash pool and third party entrust loan. In the cash pool business, due to the fund in the group lending, risk factor in this business may have almost zero.

We say that credit risk is mainly reflected in the enterprise to obtain funds through loans in external activities. As the only responsible for financial institutions entrusted loans business in the wholeTo extend, supervision, to help with recovery, and charge a certain procedures fromBesides, not to any form of loan risk responsibility. Therefore, entrusted loans, a borrower can not pay off the loan risk as it falls directly on the principal body. Risk and often entrusted business stakeholders to understand the risks of inadequate. Approval entrusted loans and bank loans, the loans to approval without a set of science, system, strict procedures, but also the relative lack of a unified, standard. Therefore, in the invisible increased the risk of credit may exist.

Secondly, in the loan in the bank according to theThe delegate object, purpose, amount, term of principal interest ratesTo replace the loans, in the whole process of entrusted loan, the bank has been in a passive position. In addition to the bank from which charges only in accordance with the fixed rate loan charge. At the same time, do not need to bear the risk of bank loans. Therefore, in the business, banks lack certain enthusiasm, lack of power in the supervision of lending and back, causing the loopholes in the entrusted loan regulations. And the final risk pressure or added to the entrusted person.

In recent years, as the principal of the enterprises and banks, driven by their own interests, cooperation by the client and the bank, a loan cases. On the one hand, banks may be restricted by various aspects of the loans in time, limiting their ability to lend. In this case, the bank is likely to pull a company account, and then to principal lending out, the charging of interest from. Banks often and this company agreement, given the high deposit interest. The deposit as granting loans, and loan risk responsibility borne by the bank. The lending enterprise need not take the risk, but also can charge additional revenue from, what is there against it? On the other hand, the entrusted loans, between the client and the borrower is mostly associated enterprises, there are some inherent relation. The borrower strictly review in order to escape from bank loans, can choose a form of loans to the financing, and will generally higher than corporate credit line.

Client involves loans business expenses

The entrusted loan model for loans and loans, mainly involves the following fee expenditure:

FirstEntrusted loan fees: banks accept the client's entrustment loans, loan amount, loan period according to the entrustment, default clauses in proportion to the principal charge a fee.

SecondlyThe stamp tax loan contract. In general the entrusted loan deal, a deal to pay a tax, each entrust loan to pay stamp duty according to the loan amount. 0.5. Based on the entrust loan cash pool mode, is normally provided by the enterprises and the Local Taxation Bureau of consultation, making the total loans in a certain period, and according to statistics regularly turned over to the tax rate of 0.5.

The last isEntrusted loan interest expenses involved in. In the cash pool mode, interval between account borrowing rates should in the provisions of the central bank's deposit, loan datum interest rate. Once interest rates beyond the scope, may on suspicion of transfer pricing and tax departments are in question. Entrusted loan interest income and expense can not report and pay taxes to the net, each interest income should pay business tax according to the amount of interest of 5%, the bank is withheld. But the income tax expenses are paid by the enterprise itself.

In addition, it is worth remembering that, in the new 46 tax in the strict provisions of the antiThin capitalizationIn terms of. Enterprise accepts from the related party debt investment and equity investment in excess of the prescribed standards and interest expense, not in the calculation of taxable income. But debt investment and equity investment proportion what a standard has not yet been promulgated, the proportion and the provisions must wait until the tax authorities issued a document to confirm.

Accounting treatment of enterprise when granting loans

Before, companies can set up "loans" level subjects, under the "principal", "interest","Impairment"Three a detailed account of accounting for entrusted loans, but the new" accounting standards for business enterprises "in 2007 the introduction of the abolition of the" loan "the accounting subjects. And in the"Enterprise accounting system" the second chapter sixteenthRules: the company entrusted loans, should be regarded as a short-term investment accounting. However, shall be included in profit or loss on interest, entrusted loans; enterprise scheduled due cannot be recovered. The interest, it shall stop the interest, and rushed back to the original appropriated interest. At the end of the term, the enterprise should according to the impairment of assets entrusted loan requirements, a provision for.

In the actual operation of the process for one year (including one year) the following entrusted loans, in the enterprise "short term investment" subjects of accounting. But for more than a year of the entrusted loans, is more complex, the need for "a long-term debt investment and other long-term debt investment (principal, interest accrued) accounting" course.

The simplest example: A company in January 1, 2007, commissioned by the bank loans to 5000000 yuan, to pay the bank charges 180000 yuan when granting loans. The bank will be the 5000000 loans to the B enterprise and quarterly carried interest, loan period of 1 years, the annual interest rate is 6%.

So A's account is as follows:

1 remit the deposit and pay the relevant fees

Borrow: short-term investments, loans to 5000000

The financial costs, charges 180000

Borrow: bank deposit 5180000

2 at the end of each month the enterprise interest

Borrow: short-term investments, accrued interest 25000

Credit: 25000 investment income

3 bank every month to the B enterprise loan interest (5000000 * 6% / 4 = 75000), and in accordance with the relevant provisions of "business tax" and its detailed rules for implementation, the withholding tax (75000 * 5% = 3750). Banks also pay interest to A company, the interest is deducted from the amount of business tax (750003750 = 71250). To recover the interest, according to the A bank transfer to the relevant tax notice and related original documents to the appropriate accounting treatment.

Borrow: investment income 3750

Credit: should hand in taxes, sales tax 3750

Borrow: bank deposit 71250

Tax payable - should pay business tax 3750

Credit: short-term investments, accrued interest 75000

5 to recover the loan principal

Borrow: bank deposit 5000000

Credit: short-term investments, loans to 5000000

Construction Bank entrust loan procedures

Object 1 entrusted loans
Entrusted loan is a financial trust institution that accepts the entrustment of the principal, client deposit deposit amount, according to the object, the principal specified amount, term, interest rates and other purposes, loans and responsible for receive an amount of trust business loan interest.
Entrusted loan principal, can be of various ministries, central government departments in charge of business, companies, financial departments at all levels, the labor insurance institutions, scientific research institutions and other units, can also be the enterprises and other economic organizations, as long as the money from legitimate sources, reasonable use, can handle the entrusted loan.
The extent and methods 2 entrusted loans
(1) the client to the Construction Bank Trust Institutions present a written application, object, clear the purpose of the loan amount, term, interest rates, and other requirements.
(2) the Construction Bank Trust Mechanism to review the loan object, use the client specified in the agreement signed, "loan agreement". Entrusted loan interest rate stipulated by the people's Bank of China uniform implementation of the loan interest rate, and allowed to float within the prescribed scope; trustee trust loans, to pay a fee, the specific amount, way agreed by both parties.
(3) "loan agreement" signed, the principal opened the "entrusted deposit" account in the bank and trust, will be less than the loan amount has the right to entrust discretionary funds into the account.
(4) the principal deposited funds entrusted loans, to provide "entrusted loans notice to the Construction Bank Trust". The trust institutional review that is feasible, which signed the "entrusted loan contract" and the client specified borrowing units; examination that is not feasible, timely notify the principal and listen to their opinions.
(5) due entrusted loans, the borrower can't repay the loan, requirements and the period of extension, the principal if the agreed extension and turning period, should provide the "entrusted loan exhibition to the Construction Bank Trust (RPM) period of notice"; if you do not agree to extend and transfer period, the trust agency will take the additional penalty the deduction, loans and other measures to recover the loan principal and interest.
(6) to recover the entrusted loans, trust mechanism according to the intentions of the trustor, the funds into the entrusted deposits continue to handle new loans, the loan can also be returned to client's settlement account, the end of entrusted loan.

The difference between loan and trust loan

A entrusted loan must be between client, trustee, the borrower's three party protocol; trust loan only between the principal and the trustee two party protocol;
B entrusted loan must be designated by the entrusting party loans, project, use, term, interest rates and other matters; trust loans by the trustee self determination;
C entrusted loan commissioned by the party to assume risk responsibility, so the loan guarantee by the client to handle; trust loans by the entrusted party assume risk responsibility, the loan guarantee shall be handled by the trustee;
D entrusted loan the principal charge fees, loan proceeds to the client; trust loans trustee charged the spread between deposit and loan trust trust.