All Types of Secured Loan

June. 11,2020
All Types of Secured Loan

Secured Loan is a loan made by a borrower or a third party that provides a guarantee in accordance with the law. Guaranteed loans include secured loans, mortgages and mortgages.


1. Guaranteed loans


The Guarantee of the country, legal persons, other organizations or citizens who have the ability to repay their debts on their behalf can act as guarantors. However, state bodies cannot guarantee to individuals (with the exception of those approved by the Council of State the use of loans from 0 governments or international economic organizations for loans; institutions and social organizations for public welfare purposes, such as schools, kindergartens and hospitals; and those whose corporate branches have written legal authority may provide guarantees under the authorization. The Guarantee Act also provides that the guarantor and the debtor enter into a written guarantee agreement that includes: 1) the type and amount of the principal guarantee claim;


In order to obtain bank loans smoothly, companies should choose these strong and reputable legal persons or citizens as guarantors of loans. If financial institutions such as banks can act as guarantors of businesses, the effect is more ideal, and it is easier for borrowing companies to obtain bank loans.


2. The mortgage


Small and medium-sized enterprises can provide guarantees to banks to obtain loans when they are unable to obtain a bank credit facility, or when the credit facilities provided by the bank are difficult to meet their needs. A mortgage means that the debtor or a third party does not transfer possession of the property and takes the property as collateral for the claim. If the debtor defaults on the debt, the creditor has the right to pay the property at a discount or at the auction or sale price of the property. When SMEs provide guarantees to banks, the risk of lending is greatly reduced, so banks are often willing to lend to the company.


The guarantee law provides that the following property may be mortgaged: (1) houses and other above-ground items belonging to the mortgagor; (2) machinery, transport and other property belonging to the mortgagor; (3) rights to use state-owned land, houses and other land-based fixed items which the mortat has the right to dispose of in accordance with the law; (4) machinery, transport and other state-owned goods which the morby has the right to dispose of in accordance with the law; and (5) land used by the mortgagee in the wild mountains, wasteland and other wastelands with the consent of the mortgagee; (6) Other assets that may be mortgaged in accordance with the law.


The Guarantee Act stipulates that the following property must not be mortgaged: (1) land ownership; (2) collective land use rights such as cropland, farms, self-retention lands and self-retention mountains; 3) educational institutions, medical and health facilities and other public welfare institutions for the purposes of public welfare enterprises such as schools, kindergartens and hospitals; (4) property whose property, right of use or disputed property is unknown or disputed; (5) property that is not subject to security in accordance with the law.


The mortgagee and the mortgage enter into a written mortgage agreement, and the mortgage agreement includes: (1) the type and amount of the principal secured debt; (2) the period during the period during the term for the debtor to carry out the debt(3) the name, quantity, quality, condition, location, ownership or use of the mortgage; (4) The scope of the mortgage guarantee; and (5) other issues that the parties deem necessary.


3. Pledge loans


Pledge loan is also an important form for small and medium-sized enterprises to obtain bank loans, and an important supplement for enterprises under the condition of not having the advantage of credit loans. A pledge means that the debtor or a third party transfers its movable property (or property rights) to the possession of the creditor and takes the movable property (or property right) as security for the claim. In the event of a debtor's failure to perform the debt, the creditor shall have the right to pay the movable property (or property rights) at a discount or at the price of the auction or sale of the movable property (or property rights). The transfer of movable or property rights becomes "quality". When it is possible to provide quality to banks, sMEs can easily obtain loans from banks.


The Guarantee Law stipulates that the following movable property or rights may become the quality of the pledge loan: (1) a bill of exchange, a cheque, a promissory note, a bond, a deposit slip, a warehouse bill, a bill of lading; (2) a share or stock that can be transferred according to law; (3) the right to exclusive trademark use, patent rights and copyright that can be transferred according to law; and (4) other rights that can be pledged according to law.