A loan loss provision is an amount set aside by a lender to cover potential losses on loans. The provision is a charge against earnings, and is used to reduce the value of loans on the balance sheet. Loan loss provisions are important for lenders to maintain in order to cover potential losses from loans … Read more
Microcredit is a type of financial service that offers small loans to entrepreneurs, farmers, and other low-income individuals who lack access to traditional banking services. Microcredit loans are typically used to finance small businesses or to cover basic needs such as housing, education, or medical care. Microcredit programs typically charge interest rates that are lower … Read more
A loan constant is the percentage of a loan’s principal that is paid as interest each year, expressed as a percentage of the loan’s original principal. For example, if a loan has a loan constant of 10%, then 10% of the loan’s principal will be paid as interest each year. The loan constant is also … Read more
A demand note is a debt instrument that requires the issuer to pay the holder a specified sum of money, usually on demand. The issuer may be a corporation, a financial institution, or the government. Demand notes are typically unsecured, which means they are not backed by collateral. However, some demand notes may be secured … Read more
A nonaccrual loan is a loan on which interest is not being accrued because the borrower is not making payments or is not expected to make payments. Nonaccrual loans are sometimes called “nonperforming loans.” Is accrued interest an asset or liability? Yes, accrued interest is a liability. This is because it is the interest that … Read more
Warehouse lending is a type of loan that allows banks to borrow money from other institutions in order to fund their own lending activities. This type of lending keeps banks from having to use their own capital to fund their lending activities, which can help them to stay afloat during times of financial difficulty. What … Read more
A friendly loan is a loan that is extended to a friend or family member without any expectation of repayment. This type of loan is typically given as a way to help out a loved one in a time of need, and is not expected to be repaid. Friendly loans are often interest-free, and are … Read more
A grace period is the time between when a borrower first misses a payment and when the lender can start charging penalties. Grace periods give borrowers a chance to make a late payment without being penalized. Most lenders allow a grace period of 10 to 15 days. If you’re considering taking out a loan, it’s … Read more
A covenant-lite loan is a type of loan that has fewer restrictions (or covenants) than a typical loan agreement. Covenant-lite loans give borrowers more flexibility in how they use the loan proceeds and often have less stringent financial reporting requirements. Covenant-lite loans became popular during the credit boom of the early 2000s, as they allowed … Read more
A loan register definition is a document that defines the parameters of a loan, including the loan amount, interest rate, repayment schedule, and other terms and conditions. The definition may also include information on the borrower’s credit history and financial situation. What is recorded on the loan Application Register Lar? The loan Application Register Lar … Read more
