Short and Medium-Term Loan in the UAE Policies and Procedures - Research Paper Example

The financial institute considered for the purpose of this report is HSBC Bank Middle East Ltd. This bank for the purpose of granting the loan to the company shall make a complete review of the financial position of the company. The financial analysis would include a cash flow analysis, analysis of the various ratios like profitability ratio, liquidity ratio and gearing ratio, an analysis by the long-term creditor and examination of the collateral securities that the company has to offer to the bank for the loan purpose.

The cash flow analysis flashes a detailed view of the inflow and outflow of cash into and from the business respectively. Pertaining to the income statement the operating cash flow shows the increase and decrease in cash. The cash flow showing the investments depicts the increase and decrease in assets. The various kinds of ratios are studied thoroughly to bring out the actual position of the company. The ratios that are studied, contributes to knowing the various assets and liabilities and their impact individually and as a whole on the business unit.

The various ratios studied are profitability ratio, liquidity ratio, and leverage ratio. The analyses of these ratios provide a clear picture of not only the company’s assets and liabilities but also forecasts possible profits and losses of the enterprise. The various provisions provided by HSBC Bank Middle East Ltd. are studied and the various kinds of loan that this bank has for its customers are also keenly observed. According to the requirements of an individual or a business customer, loans may be chosen by the customer from the bank.

The processes and procedures involved in obtaining the loan are closely observed and recommended accordingly. The business environment of UAE and the various provisions for the foreign investors are enumerated in details. The various aspects that UAE takes a heed of apart from facilitating business activities in the country are also keenly studied. The facility of free zone is largely talked about including its advantages and also the various barriers that a foreign investor may face in UAE are discussed.

The advantages of local rather Emirati–owned business unit over the foreign investors are also included in the discussion. Table of Contents Executive Summary 2 The Nature and Purpose of Loan Requested By the Customer 6 Bank’s Policy In Terms of Granting Loans 7 Types and Nature of Financial Information the Customers Are Required To Furnish To Support the Purpose of the Loan 10 Types of Analysis the Banks Usually Do 11 Types and Nature of Security the Bank Usually Ask For 14 Impact of the Most Recent Downturns of the Economy and Massive Business Failures of HSBC Bank Middle East 15 Bank’s Specialization on Handling Such Loans 16 Any Government Incentive And Or Support the Banks Receive In Handling Such Loans 17 UAE’s Business Environment Facilitating Emirati-Owned Businesses 17 Conclusion 19 References 21 Introduction The lending institutions are generally seen to offer loans for different periods based on the purpose of the loan, such as short–term, long–term, and medium–term.

In the context of business, the short-term loans that are offered by the banks are usually to curb the needs of working capital of the business. These working capital needs of a company may range from raw materials purchase, electricity bills to be paid and payment of taxes among others.