Application for Credit

Banker:	Our discount committee is still discussing your application for credit. I wonder if you’d mind giving us some more information about certain items shown on your balance sheet.
Customer:	Not at all.
Banker:	Is the mortgage on your fixed assets being amortized?
Customer:	Yes. We’re making semi-annual payments on this obligation.
Banker:	Your balance sheet shows some indebtedness. Are any of your asserts pledged as security?
Customer:	No. That’s just an open note.
Banker:	Would your company be willing to pledge part of its current assets as collateral security to our loan?
Customer:	We wouldn’t object to that. Part of this money will be used to retire present debts and part to expand our operations. Then we can immediately begin to liquidate this new liability.
Banker:	I think we’d better prefer that arrangement.

Ex. 1. Role-play the dialogue.

Ex. 2. Apply to the bank for a loan to support your studies/your trip abroad/renting a flat.

B.

Role Play

Three different groups of inexperienced young business people in a small town require capital for their businesses. They all apply to the local branch of Megabank.

The tree groups of would-be borrowers must develop financial arguments that they think will convince the bankers. The group prepareing the role of the bankers has to think of questions about the viability of the future businesses: will they be successful, and why? Or why might they not be successful?

The roles are:

1. A junior manager (and assistants) at the bank, responsible for new local small businesses. To lend or not to lend, that is the question.

2. A group of young people who want to open a small specialist record shop seilling CDs of dance music.

3. A group of young people who want to buy an existing take-away business (the lease on the premises, the kitchens, the delivery scooters, and so on). The business is profitable, and well-known in the town, with loyal customers. The new owners can keep the same telephone number, and either keep or change the name.

4. A group of students who already operate a part-time computing consultancy service, advising small business on what hardware and software to buy, and how to set up a website. They want to borrow money to buy more computers for themselves, on which to try out elaborate new software programs.

Your teacher will give you further details about the roles. You have to prepare your questions or arquments in a group, after which one or two members of the groups of borrowers will be chosen to negotiate with the bankers.

C.

Discuss the following issues.

1. Whom is an overdraft mostly used by and what are the advantages with it? Can students in your country make use of it?

2. What are the commodities that a bank trades in your country?

3. What changes have there been in personal banking recently? What further changes do you foresee in future?

4. If you possess a large sum of money, what are the pros and cons for the following: – putting it into a stock; – buying a bundle of lottery tickets; – taking it to (local) Las Vegas; – buying gold; – investing in real estate; – buying shares; – putting it in a bank?

5. How would you comment on the saying: “When America sneezes, the whole world catches a cold”?

6. What are the basic financial institutions in your country?

7. How can you get a loan from a bank in your country?

8. What large projects are being financed, or have recently been financed by foreign banks in your country? Find the information to make short reports in the class.