Foreign bank loans

 

(a) Overview of the foreign bank loans

 

Foreign bank loans, means to raise funds for a project, a mode of financing the Borrower Loans to foreign banks in the international financial market. At present, foreign banks have accelerated the pace of entering the Chinese, they will use their knowledge of international finance, a wealth of experience in modern management, high asset quality, strong to control the financial and risk control ability, financial institutions and the fierce competition in the market and talent. Is a very good news for the common financing difficult problem of small and medium enterprises.

Small and medium-sized enterprises need to do a lot of preparatory work before applying for foreign commercial bank loans, must submit a project proposal, after a series of procedures for examination and approval, and then apply for a loan to the foreign commercial banks, the legal status of the borrower as proof of the need for documents, legal opinion, the feasibility study report of the project and corporate balance sheets and other documents such as a foreign financial institution at the same time to submit. Then both lenders and borrowers on the loan amount, term, interest rates, repayment methods, the cost of negotiations, an agreement, the two sides signed a loan contract, the loan company in accordance with the provisions of the loan contract or loan installment once extraction.

 

Two. Characteristics of foreign commercial bank loans

 

First, foreign commercial bank loans are non restrictive loan

   1 of all funds can apply for loans, foreign commercial banks directly to social management, no loans and loan qualification, who need funds to bank to apply for loans from banks, according to the use of funds, the repayment ability of borrowers and creditworthiness, decided to lend or not.

   2 not specified the use of the loans. General commercial bank loans are not specified, the borrower can according to their own needs to arrange the use of.

   The 3 procedure is relatively simple. Foreign commercial bank loans is not restricted, also do not limit the use of area, also does not need complicated loan approval procedures.

   4 do not limit the amount of loans. As long as the borrower credit is good, does not limit the amount of commercial bank loans.

   5 the borrower can choose currency. In most cases, the commercial bank loans allow to choose all kinds of money. So, the borrower can be flexible to what money to repay the loan risk, can also take the initiative to master the borrow money for exchange rate changes.

 

Second, foreign commercial bank loan interest rate is relatively high

   As money managers, restricting the national commercial banks loan amount, loan interest rates by various currency in international financial market supply-demand relationship and the bank itself operating conditions, at the same time, interest rates are also affected by the borrower credit level. Whether the fixed rate or floating rate, generally according to the average international market interest rate calculation, so high. Foreign commercial bank loan interest rate level is related to the following factors:

   1 the length of the loan period. General loan period is longer, the higher the interest rate; conversely, the lower the interest rate.

   2 kinds of currencies. The use of a wide range of hard currency, exchange rate stability, loan interest rates low; and soft currency exchange rate instability and a downward trend, so the loan interest rate corresponding to the high.

   3 the form of interest rate. Use the same currency, fixed interest rates in the circumstances, the borrower on the cost of borrowing is easy to measure, risk is low, so the fixed interest rate is generally higher than the floating interest rates are high.

   4 drawing methods. Disposable cash than staging withdrawals of low interest rates, because disposable cash to banks, funds is relatively easy to arrange. Also, the borrower an ATM often staging, unused part can only be used in other ways, such as in the bank, and the bank deposit interest rates lower than the lending rate, so the one-time cash withdrawal rates lower than staging.

   5 there is no grace period. The loan project after the expiration of a period of time, are generally required to accumulate funds for repayment, this time called grace period. A grace period of loan interest rate higher than the no grace period loan interest rates, because during the grace period can not pay the principal and interest rates high.

    

Third repayment methods, foreign commercial bank loans of

   1 due to a repayment. Borrowing both parties signed a loan agreement, by agreement, plan or a loan, a return of principal expiration. A quarterly or half yearly interest.

   2 times the return. Borrowing in the signing of loan agreement that stipulates the payment period and repayment period. The borrower in the payment period, divided by every six months once, (or quarter) according to the actual loan amount and duration of interest at a time; in the repayment period, repayment of principal and interest of each half a.

   3 since the date of repayment of loans, year after year. For example, a 5 year loan of $100000000, from the first year to pay $20000000 a year, by the end of fifth to pay off the principal and interest.

   4 delayed repayment. The provisions of the loan to a certain grace period. For example, a 5 year loan, according to the agreement, maturity can be extended for a certain period of time (such as the first half of ) service. But the extended period interest rate increase.

5 early repayment. The loan agreement both require borrowers can advance repayment. This is very favorable to the borrower, he can borrow money at the exchange rate floating range is bigger, or lending rates upward trend of repayment, so as to avoid foreign exchange risk, reduce the interest burden.

 

(three) species of foreign commercial bank loans

 

   (a) according to the period can be divided into short-term loans and long-term loans

   1 short-term loans, short-term loans are within 1 years of the loan. Short term loans are divided into two kinds: one is between the bank interbank; two is the bank on non banks loans.

   2 long term loans, long-term loans is more than 1 years in duration of the loan, among them, 1 - 7 years is a medium-term loan; more than 7 years of long-term loans.

   (two) according to the loan can be divided into different term loans and revolving credit

   The 1 term loan, the loan period is specified in the loan agreement the repayment plan and the time of the loan, usually can be divided into a repayment of principal and interest and amortization of principal and interest two.

   2 revolving loan, loan refers to a certain period of time, the bank allowed borrowers to repay their loans, re loan, as long as the loan balance does not exceed a certain amount. For seasonal production enterprises and the temporary settlement loan.

   (three) according to the lending bank can be divided into different sole bank loans and bank loans

   1 exclusive bank loans, bank loans provided by the exclusive refers to a bank loan. Such loans for the banks, risk, time not too long, generally 3 - 5 years, the small amount, generally not more than 100000000 dollars.

   More than 2 of bank loans, bank loan is a loan by a number of banks to provide. There are two main types: one is by a bank for foreign customers to provide a loan, invite other banks in the participation business loans; two are led by one or several banks, some banks (belonging to different countries) a consortium involving people, common to a country's borrowing loans the syndicate.

 

Four.Foreign bank loan program

 

   (a) for the preparation work before

   Small and medium enterprises in the application of foreign commercial bank loans, must submit a project proposal, after a series of procedures for examination and approval. Specific include:

   1 the preparation of project proposals;

   2 the project feasibility study, the feasibility study report of the project;

   3 determine the domestic financing way;

   The formation of the 4 negotiating team (including lawyers, engineers, accountants and marketing expert), and prepare the required a variety of.

   5 the choice of bank loans. The loan company to determine the bank loans properly according to the specific circumstances of the project, financial market conditions, capital supply, financial strength etc..

   (two) loans to foreign commercial banks

   Enterprises after the completion of the preparatory work, can apply for a loan to the foreign commercial banks, and submit the following documents:

   1 the borrower the legal status of documents;

   2 legal opinion;

   The feasibility study report of the project and the company balance sheet 3;

   Other documents required 4 foreign financial institutions.

   (three) to negotiate with foreign commercial banks

Both lenders and borrowers on the loan amount, term, interest rates, repayment methods, the cost of negotiations, agreement, both sides visa loan contract.

   (four) the loan company loan

Borrower of the loan contract or loan installment once extraction.