Business Finance Assignment Example | Topics and Well Written Essays - 2000 words

Business Finance - Assignment Example The HSBC Bank is earnest in the provision of finance to individuals, small, medium sized and large companies to facilitate both formation and growth. The bank is the intent on guiding institutions on ways of improving themselves so that they are more likely to acquire finance whenever necessary; HSBC finances business endeavors aimed at enhancing the business’ ambitions both in the country and overseas. Moreover, the bank believes in cooperation between itself and the client by providing guidance on ways of presenting strong applications for finance in order to improve the clients’ business. The bank has a number of finance products, which target various entities; the small business loan, for instance, is ideal for funding long term business projects and programs. This business loan encompasses loans ranging from 1,000 – 25,000 pounds; thus, it is well within our reach and is repayable in between one year to ten years. HSBC charges a fixed rate of interest for th e duration of the loan, therefore, no terms on reducing balance are offered under this loan type. We have an option to pay or defer the first monthly repayment for up to three months once the loan has been disbursed. Such deferral is non the less considered as part of the loan repayment duration, and interest is charged for every deferred month. In order for clients to track repayments and account for the outstanding balance, the bank has incorporated the Business Internet Banking portal on its website where all interested clients receive a unique user name and password to enable them access their accounts portfolios. We note that HSBC’s charges and rates provide additional avenues for spending money. For instance, all loan applications are subjected to a 100 pound arrangement fee. This covers processing fees and all paperwork. Once disbursal is done, and payment is in default, the bank charges an additional fee for the default. However, the bank allows for overdrafts on loan s, essentially, this is additional funding on an already existing loan. In order to process such an overdraft, the bank charges an additional fee, and the interest is compounded for both the loan and the overdraft; these fees and charges are deducted from the client’s current account which is a mandatory requirement for all loan applicants. The bank rewards early loan settlement by awarding rebates according to the Consumer Credit (Early Settlement) Regulations 2004 (HSBC. 2011, p.14-17). The Royal Bank of Scotland (RBS), on the other hand, offers different loan packages based on the amount borrowable and the total repayment period. For instance, the bank offers both business and corporate banking modules; under corporate banking, businesses can only borrow from 26,000 pounds. The business banking module is thus better suited to our requirements as it offers facilities to individuals and small companies. Under business banking, RBS offers small business loans and fixed rate b usiness loans. These loans entail borrowing of up to 25,000 pounds and limits of 25,001-250,000 respectively. The small business loan is hence our best option in RBS. Under this type of finance, the bank may require security in the form of either a vehicle or other assets if it feels your repayment potential is questionable. The bank is quite a versatile option as it does not require payment of any arrangement or security fees. However, much like HSBC, RBS’