Banks on the other hand, deals with lending money to clients mostly on financial statement loan, asset-based loan, and small business credit scoring loan. Literally, financial statement loans are advanced to clients based on the liquidity, profitability, and solvency ratios appearing on the two component papers which are the balance sheet and the income statement. Based on the same instrumentality, asset-based loans are granted, but, with a security value that is projected on the accounts receivable, inventory, and fixed assets. Credit scoring loans are quite complicated as it requires past records of loans made by the client (Berger & Udell, 2003).
Tuesday, August 25, 2009
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