. Cranberries; : the national cranberry magazine. Cranberries. repaid with interest at the end of the term. A $1,000 loan for one year at 6 percent interest is repaid in full, $1,060, at the end of the 12 month period. There is a variation to this type of loan in which the bank deducts the interest in advance or renews the loan quarterly. Both of these methods represent a slight increase in the straight "true interest" rate. You can also borrow on your personally owned or business owned vehicles. Usually, you'll get a lower rate on auto or truck loans but because they are installment
. Cranberries; : the national cranberry magazine. Cranberries. repaid with interest at the end of the term. A $1,000 loan for one year at 6 percent interest is repaid in full, $1,060, at the end of the 12 month period. There is a variation to this type of loan in which the bank deducts the interest in advance or renews the loan quarterly. Both of these methods represent a slight increase in the straight "true interest" rate. You can also borrow on your personally owned or business owned vehicles. Usually, you'll get a lower rate on auto or truck loans but because they are installment loans and must be repaid monthly, the true interest rate is almost double the discount rate quoted. Or you can hypothecate securities owned individually or in your firm's name. Most banks will lend up to 70 percent of the market value of listed securities, some over- the-counter stocks and most mutual fund shares. In most states, there are usury laws setting forth maximum rates that can be charged on loans, but most states allow higher rates than the usual maximum in a situation where loans are secured by the pledge of securities. FACTORING: The pledging of a firm's accounts receivables is a relatively simple way to get liquidity, but the method is costly and only those firms with a high gross margin can ever consider factoring of accounts receivable. Most factoring is done on the basis of assigning sales invoices to the factor in exchange for an advance against future payments. Let's say your agreed upon rate is Wi percent. Then, on $1,000 of bills assigned, the factor wiU advance $788 ($1,000 less $200 reserve = $800 X l'/2%). The IVi percent charge is good for 30 to 45 days, after which the uncollected account is charged back against the reserve account or there is an additional charge levied of IVi percent. On any unpaid balances, there is a charge of '^ to 'A of 1 percent per month. Factoring can be obtained on a notification basis-where customers pay directly to the fact
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