Stockland Loan Application Analysis

This assignment examines Stockland's proposed loan application for $250 million. It analyzes the types of securities offered (land, vehicles, buildings), their balance sheet values, lending margins, and net realizable values. The analysis also explores Westpac's lending policies and how Stockland's purpose for the loan aligns with these policies. Finally, it discusses the potential financial implications of acquiring a loan.

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CREDIT AND LENDING MANAGEMENT
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Introduction
Loaning is one of the very important roles of any financial organization. If not controlled
properly, it can result to credit quality issues, frightening the survival of the monetary institution.
To control the lending role properly and alleviate credit quality issues, bank management staff
should be sufficiently trained lending evaluation techniques. Loan agreements are of different
kinds and with diverse terms, oscillating from basic promissory, between associates and family
affiliates to more intricate loans like mortgage, payday and student loans.
This paper provides an outline of some of the key issues likely to come up as a result of
Stockland company decision in relation to the present day retirement borrowing background, and
the challenges likely to face key stakeholder in dealing with the financial needs and preferences
of this company.
Security in business
Security is a fungible, open financial tool that holds some type of financial value. It
denotes an ownership status in a publicly operated corporation, a creditor correlation with a
corporation (signified by possessing an entity's pledge), or rights to ownership as denoted by an
option (Degryse, et al., 2012).
The role of securities
The entity that makes the securities available to be purchased is known as the backer, and
those that get them are, obviously, speculators (Sathye, et al., 2014). By and large, securities
speak to a venture and a method by which districts, companies and other business endeavors can
raise new capital. Companies can create a considerable measure of cash when they open up to

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the world, offering stock in a first sale of stock, for instance. City, state or area governments can
raise stores for a specific task by coasting a city bond issue (Degryse, et al., 2012). Contingent
upon a foundation's market request or valuing structure, raising capital through securities can be
a favored contrasting option to financing through a bank credit.
Then again, buying securities with obtained cash, a demonstration known as purchasing
on an edge, is a mainstream venture strategy (Huppi & Feder, 2011). Fundamentally, an
organization may convey property rights, as money or different securities, either at initiation or
in default, to pay its obligation or other commitment to another substance. These guarantee game
plans have been developing generally, particularly among institutional financial specialists.
Credit issues considered in any loan proposal
Without considering the place to get a loan, be it a bank, or another company a close
relative - forthcoming loan personnel will audit your trustworthiness (Degryse, et al., 2012). A
total and altogether recorded credit demand will enable the creditor to comprehend you and your
organization. The "5 C's" are the crucial parts of credit worth examination.
Key credit issues considered in regard to Stockland decision
The Capacity of Stockland resources
To repay is the most demanding of the 5 variables considered before being given the
loan, it is the vital wellspring of repayment. The lender will need understand precisely how
Stockland Company will expect to repay the credit (Berger & Udell, 2014). The bank will

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consider the general income from Stockland Company, the scheduling of the payment, and the
possibility of a fruitful repayment out of the credit. Additionally, the bank will also demand to
know how Stockland Company has been paying its creditors before. Potential financial
institutions likewise will also need to focus on other Stockland company conceivable means of
repayment (Huppi & Feder, 2011).
The Company’s Capital
Alludes to the cash Stockland Company has put into the business inform of assets as a
sign of how much the loaning foundation has in danger should the business fall flat (Degryse, et
al., 2012). Intrigued financial institutions will forestall that the company will have funded from
its own particular resources and to have encompassed private budgetary hazard to stabilize the
business before entreating that they discuss any funding.
Stockland’s Company Collateral
Likewise alluded to guarantees, are extra sorts of security the Stockland Company can
give to the loan specialist. Giving bank insurance will demonstrate a vow of an advantage
possessed by the this company, for example, a land, to the lender with the understanding that it
will be the repayment source in the event that the credit isn't repaid (Huppi & Feder, 2011). A
certification, then again, is quite recently that another party signs an assurance report promising
to repay the advance in the event that Stockland fails to repay.
Stockland’s proposed loan Conditions

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Depiction of the Stockland company’s proposed purpose for the loan, Will the cash be
used for working capital, extra gear or stock? The loan specialist will also consider the
Company’s locality monetary conditions and the overall atmosphere, both inside the Company
and in different endeavors that could play a role in the organization's business operations (Berger
& Udell, 2014).
Assuming the proposal loan amount to be $250 million
Type o security Balance sheet value
($ million)
Lending margin
($ million)
Net realizable value
($ million)
Company’s Land 100 150 100
Company vehicle’s 200 50 120
Company’s building 200 50 150
Total value of lending
margin
500 250 370
Surplus
security(unsecured)
0
Lending policies
A Lending policy refers to the financial organization’s statement of its values, standards,
and procedures that its workers must follow in granting or declining a loan request These
policies define which sector of the company or business will be ratified for loans and which will
be evaded, and must be established on the country's pertinent laws and regulations (Degryse, et
al., 2012)

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According to Westpac’s lending policy an organization is allowed to use the value of any
of its practices for establishment and expansion .it recognizes the value of cash circulation,
goodwill and proficient standing as part of the lending benchmarks (Sathye, et al., 2014). Based
on this policy, Stockland company decision to take a loan to finance a retirement is not in line
with banks policy. Instead of taking a loan, the company should have used its available resources
for this purpose. This will enable the company evade some of the disadvantages which comes as
a result of acquiring loans e.g. interest rates.

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Works cited
Berger & Udell, 2014. Relationship lending and lines of credit in financial organizations. journal of
economics, Volume 654, p. 43.
Degryse, Van & Cayseele, 2012. Relationship lending within the bank syste. journal of financial
interpretation, Volume 32, p. 3445.
Huppi & Feder, 2011. Role of securities in credit corporatives in lending. journal of restrictive economics,
Volume 34, p. 43.
Sathye, Bartle & Boffey, 2014. Credit analysis and lending management. journal of business economics,
Volume 432, p. 23.

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