Читать книгу Corporate Finance For Dummies - Michael Taillard - Страница 66

You have a few different options available when choosing a loan for your company. To make the best choice for your company, you need to be aware of the pros and cons of each loan type. If you’re not sure which one is best for you, ask a professional analyst — not the person trying to sell you the loan. Here are some terms you need to be aware of:

 Fixed versus variable rate: When you take out a fixed-rate loan, the percentage interest you pay will always be the same. For example, if you take out a loan with 5 percent APR (annual percentage rate, which is your annual interest rate), then you will always be charged 5 percent interest per year. With a variable rate loan, the interest rate you pay will change; the amount of change depends on the type of loan. Variable rate loans come in many types, and their rates change based on another interest rate, a stock market index, your income, or some other indicator. Some increase gradually over time, while others start low and jump after a period of time (these are called teaser-rates). While the wide variety of variable rate loan options is great news for the financially inclined, these types of loans can be very dangerous for beginners. The amount of information and the calculations involved in predicting the movement in variable interest rates can be a deceptively daunting task, even for experienced analysts.

 Secured versus unsecured: Secured loans are tied to some asset, which becomes collateral. Basically, you tell the bank that if you fail to pay back your loan, the bank can keep and/or sell that particular asset to get its money back. With unsecured loans, no assets are directly considered to be collateral to which the lender has automatic rights upon the borrower’s default of the loan. However, they can still hurt the credit history of the company, and a lender can still sue to get their money back.

 Open-ended versus closed-ended: Closed-ended loans are your standard loans. After your company gets one, it makes periodic payments for a predetermined time period, and then the loan is paid back, and you and the lender are both done. Think of a closed-ended loan like a mortgage, except that it’s not used to buy a house. Open-ended loans are more similar to credit cards. Your company can draw upon an open-ended loan until it reaches a maximum limit, and it just continuously makes payments for as long as it has a balance.

 Simple versus compounding interest: Simple interest accrues based only on the principal loan. In other words, if a loan for $100 charges 1 percent interest, the lender will make $1 every period. On the other hand, compounding interest pays interest on interest. So, if the borrower doesn’t make any payments on a loan of $100 with 1 percent interest in the first year, then the loan will charge 1 percent interest on $101 rather than the original $100 the second year. This type of interest is far more common with bank accounts than loans. (Turn to Chapter 9 for more on these two types of interest.)

If a company were to go out of business, any money raised by selling assets will first go to pay lenders.