Whats are the Non-Institutional Source of Short Term Loan
Posted by Ripon Abu Hasnat on Thursday, November 26, 2015 | 0 comments
a) Commercial Papers
A business organization sells Commercial Paper through promising to pay back the principal amount with interest after expiry of the certain period. At that time the company’s goodwill acts as a security to the purchaser. Usually, those persons who have some excess money left as unutilized for the time being purchase commercial papers as an alternative of investment in shares. Generally, well known person, commercial bank, insurance company, pension fund etc. can arrange finance for a short time by selling commercial papers.
b) Advance from Purchaser
Many times, trustful and permanent customers pay as advance to the producing or selling firm the full amount or part of their total purchase, and as a result, this act as a source of finance to the seller for the time being.
c) Inventory Financing
For the purpose of short term financing, warehouse asset can be used. If any business firm uses its inventory as security of loan received from a well known person or organization, it is called the inventory financing.
d) Village Moneylenders
From long days ago, rich people of the villages have been providing short term loans to the poor people. In this case, if the period of loan repayment is expired, the debtor has to pay high rate of interest. If the person fails to pay back the loan with interest within specified period, the moneylenders took the possession of his (debtor’s) tangible and intangible property. Village moneylenders count to impose interest on this loan on day basis, weekly basis and monthly basis.
A business organization sells Commercial Paper through promising to pay back the principal amount with interest after expiry of the certain period. At that time the company’s goodwill acts as a security to the purchaser. Usually, those persons who have some excess money left as unutilized for the time being purchase commercial papers as an alternative of investment in shares. Generally, well known person, commercial bank, insurance company, pension fund etc. can arrange finance for a short time by selling commercial papers.
b) Advance from PurchaserMany times, trustful and permanent customers pay as advance to the producing or selling firm the full amount or part of their total purchase, and as a result, this act as a source of finance to the seller for the time being.
c) Inventory Financing
For the purpose of short term financing, warehouse asset can be used. If any business firm uses its inventory as security of loan received from a well known person or organization, it is called the inventory financing.
d) Village Moneylenders
From long days ago, rich people of the villages have been providing short term loans to the poor people. In this case, if the period of loan repayment is expired, the debtor has to pay high rate of interest. If the person fails to pay back the loan with interest within specified period, the moneylenders took the possession of his (debtor’s) tangible and intangible property. Village moneylenders count to impose interest on this loan on day basis, weekly basis and monthly basis.
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