What Are the Different Ways to Borrow Money?

The loan method is the method by which banks issue loans to enterprises. According to different ways of loan guarantee, it can be divided into credit loans, secured loans and discounted bills. Credit loans refer to loans issued solely on the creditworthiness of the borrower; secured loans refer to guaranteed loans, mortgages, and pledged loans; discounted bills refer to loans issued by the lender by purchasing unexpired commercial paper from the borrower, which can be regarded as one A special form of pledge loan. ^[1]

Loan method

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The loan method is the method by which banks issue loans to enterprises. According to different ways of loan guarantee, it can be divided into credit loans, secured loans and discounted bills. Credit loans refer to loans issued solely on the creditworthiness of the borrower; secured loans refer to guaranteed loans, mortgages, and pledged loans; discounted bills refer to loans issued by the lender by purchasing unexpired commercial paper from the borrower, which can be regarded as one A special form of pledge loan. ^[1]

The loan method refers to the supply method for the demand for credit funds.

The bank's reasonable funding needs in the production and operation process of the enterprise unit are direct supply loans or indirect supply loans? Should it provide loans to purchasers or lenders, or loans to sales? What kind of capital supply method is adopted to help coordinate the production and sales relationship; Conducive to maintaining the leading position of bank credit and incorporating commercial credit into the bank credit track? The solution of these problems requires the choice of loan methods.

At present, the supply of credit funds in China can be divided into three types, namely direct lending, indirect lending, and buying and seller loans.

Banks need to issue loans directly to reasonable funds in the course of business unit operations, which is the direct lending method. This loan has the following three characteristics:

First: Loans for

Bank financial intermediation to the enterprise business by discounting bills, it is an indirect way of loan.
Note here is the commercial paper. Commercial paper is a way of selling goods commercial credit of creditors, in order to ensure their claims, and has mastered a certain form of written debt obligations. It set out a certain amount, the holder may be required drawer or unconditionally accepted (acknowledge payments) payment upon maturity. Commercial paper can be divided into commercial promissory notes and bills of exchange. Commercial promissory notes debtor to creditor agreement (the drawer) issued payments for a certain period to pay promised book. Commercial bills are paid in a certain period amounts creditor (drawer) on the debtor (acceptor) issued to the ticket into the payment order book. Commercial bills discounted is an enterprise units in the case of much-needed funds will not expire hands of promissory notes or bills of exchange sold to the banks, the interest from discount to maturity date of the bank deducted from the face value (principal and interest and) in , the balance to be paid in cash in the form of enterprise. Maturity, the bank payment ticket to the drawer or acceptor (purchase enterprise).
Obviously, in such financing behavior, ostensibly bank financial intermediation to Noteholders, in fact, it is the bank financial intermediation to the drawer or acceptor. Therefore, this kind of financing means is an indirect lending method based on direct financing (referring to the direct financing behavior between business units).
Indirect lending by banks to handle bill business, commercial credit in favor of the bill, which will incorporate commercial credit bank credit track. The development of discounting and re-discounting business will be helpful for the adjustment of funds and macro-control between regions, interbanks, and central banks and professional banks, as well as the formation, development and improvement of financial markets.

Seller's credit and buyer's credit are the two international export credit methods. Many countries in the world, in order to support and expand exports, strengthen international competition, encourage domestic banks to set up export credit businesses, in order to meet the financial needs of foreign importers to pay for goods. Among them, loans provided by domestic banks to domestic exporters (sellers) are called seller credits, and loans provided by domestic banks to importers (buyer) or banks in importing countries are called buyer credits.

China has now applied the seller's credit and buyer's credit methods commonly used in international trade to domestic bank credit activities. Among them is the seller's credit method.

The domestic seller's credit is the sales of goods by the sales unit (seller) on credit. The purchase unit (buyer) uses deferred and instalment payments. The bank provides a loan to the seller. After the buyer pays the purchase payment in installments, the seller returns the bank loan. A form of credit. The characteristics of seller's credit are: in order to support local enterprises to develop production and expand the sales market, the bank loans to sellers' units within the jurisdiction; loan issuance and recovery are based on the purchase contract between the purchase and sale parties; Include bank credit.
The significance of the bank's supply of funds through seller credit is:
First, the coordination between bank credit and commercial credit is conducive to macro-control and micro-activation of finance:
Second, it is conducive to giving full play to local production advantages, expanding sales, and developing and forming a unified domestic market.
Third, the seller produces according to the order requirements to ensure the realization of the value of the product and avoid backlogs. The buyer obtains the required equipment or products on schedule and repays in installments after receiving the revenue.
Fourth, it is conducive to promoting the horizontal adjustment of funds and promoting the horizontal connection of the national economy.