Only after 1979 did clearing banks start making loans with a maturity term in excess of ten years. In the case of a loan to smaller companies, the fixed interest rates are usually set at a premium over base rate ( 3% - 6%). Larger companies who have a good credit rating will probably be offerred the premium on the inter-bank rate which is lower than the base rate. Loans are usually secured on the personal guarantee of the Directors or the owner of small companies and in the case of larger ones, a charge is made against the assets of the company. If the charges are “fixed”, that means that they are linked with a specific asset of the company. “Floating” charges are made on the general assets.

All bank loans are based on three elements which the company has to be able to satisfy. The interest rate demanded by the bank, the security

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