About loans?

if there are two companies, a large company who gets bank loan of 锟?00, 000 and a rate of interests of 10% on the other hand there is a small company who get bank loan of 锟?000 and a rate of interests at 12%.

why is the large company charged a lower rate of interest?

also

who is more likely to get a loan?

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There can be many reasons. The large company may be a better customer of the bank than the small company. The large company can have a better credit rating than the small company. The big company may be offering collateral (assets pledged) on the loan, and the small company loan may be unsecured.

These are three of the most likely reasons.

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This is guaranteed to get con men posting adverts for loans!

Here is the answer. The large firm is seen as a having a lower risk of not paying the loan back. Lower risk = lower rate of interest.

Large firm more likely to get the loan.|||small business loan is small business. Thats why them call them that.|||Little guy doesn%26#039;t have compensating balances in the bank. Big guy has big balances - gets the better loan, better rate, etc.|||Interest rates are determined by a multitude of things. Here%26#039;s a few items that can affect the interest rate and the reason%26#039;s why (in brief).

1. Creditworthiness: If a company has a poor credit history then the risk to %26#039;financier%26#039; is higher and therefore a higher interest rate will be charged to %26#039;offset%26#039; that risk. Generally larger companies are more capable to paying their bills and less like to go bankrupt.

2. Size of loan: This is about quantity not quality. The larger the number the lower the interest rate (generally). On a (VERY BASIC) $100,000 loan as 10% there will be a return of $10,000. On a loan of $1,000 at 12% there will be a return of only $120. So, why would a financier want to make a small loan with a lower interest rate and not make a profit worth the risk?

3. Value of Money Over Time: This is a concept that defines how much one dollar/franc/Euro/ect is worth over a set period of time. For example, is a bank can put it money in a VERY safe government bond it can make 2 to 3 percent. This %26#039;sets%26#039; the low end of the VMOT. If they can put a loan to a company for a higher interest rate (which is their primary business) then this is the %26#039;high end%26#039; of the VMOT. Negotiating interest rates becomes an analytical skill of weighting the risk of making the loan against the potential profit from the loan and then against the VMOT scale that resides between lowest return/lowest risk and highest return/higher risk.

So.. who is more likely to get the loan? Well, this depends on all the factors above along the businesses relationship with the bank, the businesses history with the bank. In the example you gave, the bank would MUCH rather do the larger loan over the small loan because of the potential profit generation.

Hope this answers the question!|||This is a very technical question,but I have this to say: The interest rate is charged considering vorious economc factors. In the cause of answering this question I%26#039;ll mention some of them and that will form part of my conclusion.1. Inflation rate emanating from the stability or volutality of the general performance of the economy; where the inflation is high, the interest rate will for sure be high as compared to the economy that its inflation rate is low.2. The running cost of the loan and the administration costs of the lending institution. 3.The pre determined profit margin of the organisation; and 4. The risk involved of the loan repayment.The higher the risk of the loan recovery will trigger higher interest rate. From the above factors therefore the determinition of the interest rate consider them. But on the issue of who is likely to get the loan will depend much of the 5Cs. What %26quot;colateral%26quot; is available to both of them considering the volume of the loan, the Capacity to pay and others.