The Cost of Bank Credit Financing

• Main Author: Mihaela Cosmina Petre (Niţă)
• Format: Article
• Language: English
• Published: Danubius University 2007-10-01
• Series: Acta Universitatis Danubius: Oeconomica
• Subjects: conventional financing method; financing tools; long term credit
• Online Access: http://journals.univ-danubius.ro/index.php/oeconomica/article/viewFile/49/46

Although the credit is a conventional financing method used by any company, this tool is by far a very significant issue. The range ofcredits, that a bank provides, and the current policy customize this tool in order to meet the typical financing needs of the enterprises that demands it.Considering the risks, the bank takes the charge of by placing credits, the “eligibility” terms of enterprises that can get such financing being verystrict. Restrictions concerning the accepted degree of liability, the accomplished level of performance or available warranties may represent real“barriers” for many companies. Of all “barriers”, the high cost of some financing tools is a good case in point. In order to have a clearer picture ofwhat this financing source is for an enterprise, I have carried out a cost analysis of these financing tools, the medium and long term credit cost andthe short term credit cost.