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What is Gross Loan

26.03.2011 07:54:57

Any type of loan that issued by a bank has features that should be studied thoroughly before going to the institution. A gross loan has a narrow meaning and denotes a special arrangement in the debt carried by the borrower. The borrower is responsible for withholding taxes on the interest.

Borrower vs. lender

In this case, a lender receives interest gross of taxes. Currently, lenders are accustomed to receiving various tax credits on this amount. Sometimes, a borrower may use these credits to compensate his own taxable position. It can enhance a borrowers returns as well. This is one of the features making this type of loanattractive to any borrower.

Tax spared lending

There is another concept similar to the gross loan. Tax spared lending is the opposite type of transaction . In this case, the lender receives the net amount. As with any type of debt , it implies all loan instruments, entailing the redistribution of finances between the borrower and the lender.

This action initially comprises borrowing or receiving of money by the borrower from the lender, with the former obliged to repay an equal sum of money to the latter at a specified time. The loan is repaid using partial repayments or regular installments. Each installment is for the same amount of money .

Gross loan features

A gross loan is usually extended at a cost commonly known as interest on the debt, providing an incentive for lenders to extend the loan. In this case, a contract generally enforces the restrictions and obligations of the loan. It is normally associated with the concept of loan agreements, where the borrower is placed under additional restrictions. Although, in theory, it relates to monetary loans , almost any material object can be lent, depending on the lenders and their needs.

The main task of any financial institution is providing loans. Other institutions are concerned with issuing bonds or debt contracts, commonly used as a source of funding.

International performance of gross loans

International analysts are now very interested in the pros and cons of gross loans and their performance worldwide. Some reports state that many banks cant perform loan to gross loan.

The Bank of India provides an example. It couldnt perform loan of 2.3% of gross loan in 2008. So, it was much lower than the world non-performing loan 3.2 %.

Many international banks and borrowers take this into consideration, when choosing a financial institution from which to borrow gross loans for business development.

Forbes ranking of gross loan institution

Forbes publishes a ranking of the Top 50 microfinance institutions, listing the institutions according to return on equity, return on assets, loan balances overdue by 30+ days as a proportion of the total gross loan portfolio , operating expense, and gross loan portfolio. All of the institutions were graded in 4 equally weighted categories, including profitability, portfolio risk, efficiency and scale. The research is based on the total scores in these 4 categories.

Gross Loan Proceeds

Gross loans are usually attributed proceeds said to be in the amount of seventy-nine million dollars, largely coming from Initial Public Offerings.

Gross or total loans

The gross dollar sum of all lease and loan financing receivables is represented on the balance sheet, according to the Securities and Exchange Commission. The gross or total loan is net of unearned income.

A gross loan is an especially large credit provided to a borrower. It is a loan where the value of the debt issued to the borrower, plus 50% of guarantees and obligations, exceeds 15% of the bank's own funds.

According to VTBs analytical consensus, gross loans are a part of the average interest-earning assets that an inevitable part of net interest income.

In countries such as Norway, in September the total gross loan amounted to 4 490 billion, decreasing later in the year. It proves that the country can repay debt at a specified time, using certain economic techniques and instruments.

At present, the term total gross loan or debt is widely used by many analysts, as the concept gains popularity in the financial community. It denotes not only the process of transferring money between a lender and a borrower, but has acquired a broader meaning.

Ways to get the gross loan

There are many banks, including the 50 stated above, offering such an option as issue of gross loans. Their amount varies greatly and may comprise different sums, though many companies do require them, in order to carry out their business activities effectively.

Thus, to receive a gross loan, one must contact one of the reliable banks, offering this operation. Nowadays, this is not difficult, as many of these banks have websites offering all necessary information concerning loans and their issue.

Main obstacles in receiving gross loans

Many companies and organization face problems when trying to receive a gross loan. Some of them involve their ability to repay the loan at the specified time. The reliability of the borrower may also come into question due to the effects of the economic crises which have caused significant financial difficulties for many organizations and countries. Depending on the amount of the loan, it may take a long time to get an answer from the lender on its issue. There are many cases where the lender refuses to issue gross loans, due to some factors he deems significant.


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