Entrusted loan: refers to the loan business in which the funds provided by the principal from legal sources are transferred to the general entrusted account of the entrusting bank, and the entrusting bank issues, supervises the use and assists in the recovery on behalf of the principal according to the loan object, purpose, amount, term and interest rate determined by the principal. Customers can be government departments, enterprises, institutions or individuals.

Significance of entrusted loan

Entrusted loan is actually equivalent to the borrowing of funds between enterprises, but because it is explicitly prohibited in China's General Rules for Loans, it is not allowed to transfer funds between accounts of different legal entities without actual trade background. Therefore, mutual financing between enterprises can only be achieved through entrusted loans.

For enterprises with abundant funds, it is obviously unwise to leave a lot of funds idle in accounts and only rely on the interest rate of small bank deposits to obtain income. If this capital is invested, many enterprises will not be willing to carry out investment activities with high returns and high risk factors because each enterprise has a certain risk factor.

At the same time, investment will inevitably lead to losses. So how to effectively use such a large amount of idle funds? Entrusted loans just cater to the requirements of surplus enterprises in this regard. Effectively improve the utilization rate of funds within the enterprise. It provides an effective means for enterprises to obtain additional income.

Similarly, for banks, entrusted loans are the intermediary business of banks, and banks play the role of matchmaking. By helping enterprises to complete entrusted loans, banks charge certain fees and increase their business income.

What does entrusted loan mean?

Entrusted loan refers to the loan business in which the principal provides funds from legal sources, and the entrusted bank issues, supervises the use and assists in the recovery according to the loan object, purpose, amount, term and interest rate determined by the principal.

1. Entrusted loan refers to the loan business in which the principal provides funds from legal sources, and the entrusted business bank issues, supervises the use and assists in recovery on behalf of the principal according to the loan object, purpose, amount, term and interest rate determined by the principal. Customers include government departments, enterprises, institutions and individuals. Let's take an example to understand: Company A wants to borrow money from Company B, but because it has no loan qualification, there are only two ways to borrow money from Party A. The first way is to actually do a loan business through "fuzzy" treatment methods such as advance payment, capital occupation and capital exchange, which is also supported, but it is not clear that this business is the loan responsibility stipulated in the Contract Law. The second way is to entrust loans through banks or licensed financial institutions. So what are the specific benefits of entrusted loans?

Second, 1, the security bank will control the compliance of the whole loan. When there is collateral, it is generally mortgaged to the customer (that is, the bank), and the bank will supervise the collateral. If there are bad debts in the future, it will be more convenient to dispose of the collateral.

2. Credit management is more standardized. Banks can check and report credit information, which is more deterrent to the credit management of borrowers.

3. In the tax declaration, the actual interest rate of entrusted loans can be deducted from the bank for tax declaration, while the loans between enterprises and non-financial institutions are usually declared according to the benchmark interest rate of bank loans in the same period, so the corresponding preferential tax treatment cannot be obtained.

4. In the examination and approval of entrusted loans, banks are more suitable for industries with high leverage and high capital cost, such as real estate. Now entrusted loans are very beneficial, because the state has introduced relevant policy support.

Third, the Administrative Measures for Entrusted Loans of Commercial Banks clearly stipulates the sources of entrusted loans, which can prevent idle credit funds, guide credit funds to better serve the real economy, and promote the healthy development of enterprises, especially small and medium-sized enterprises. Generally speaking, entrusted loans have expanded the loan amount and facilitated more individuals and enterprises to obtain loans smoothly. The current financing environment is in a relatively relaxed state, which is a good time for loans.

What is entrusted loan? How to deal with it?

At present, there are four main forms of bank loans, and entrusted loans are one of them. So, what is entrusted loan? How to handle entrusted loans?

Entrusted loans refer to loans provided by clients such as government departments, enterprises, institutions and individuals, and issued, supervised and recovered by lenders (i.e. trustees) according to the loan object, purpose, amount, term and interest rate determined by clients. The lender (trustee) only charges the handling fee and does not bear the loan risk.

The basic procedures for handling personal entrusted loans are:

First, customers apply for loans from banks;

Second, the bank selects and matches according to the conditions and requirements of both parties and recommends them to customers and borrowers respectively;

Third, the client meets the borrower directly to negotiate and make decisions on specific matters and details such as loan amount, interest rate, loan term and repayment method;

Fourth, after the borrowers and lenders negotiate the requirements, they go to the bank together and sign entrustment agreements with the bank respectively;

Fifth, the bank investigates the borrower's credit status and repayment ability and issues an investigation report, and then the borrower signs a loan contract with the borrower, which is issued after the bank approves it.

This concludes the introduction of whether entrusted loans are off-balance-sheet business. I wonder if you have found the information you need?