Assignment no 5

“Short term loan by Allied Bank ltd”

Submitted to: Sir Atif Bilal

Submitted by: Badr-e-Munir 180068
Hamza Zahid 180070
Kashif Mehmood 180047
BSAF-4

Abstract:

This assignment covers the following content:

1. Interest charge
2. Variation in interest charge
3. Business selection criteria
4. Amount of loan
5. Considerations
 Allied Bank

All the information provided below is related to short-term loans provided by

Allied bank to businesses. This information is not relevant to long-term loans
or personal loans.
NOTE: Product name may be personal loan but this loan is for businesses.
Interest charge:
KIBOR+3%

Variation:
Depending upon the considerations discussed below and past experience with the
business, the variation in interest charge is 1%-1.5%.

Business selection:
It was clearly communicated by representative of Allied Bank that they only
provide loan to running businesses and not to newly launched(startup) businesses.

Amount of loan:
Allied bank provides loan equivalent to 40% of business worth and strictly
consider providing loan to the companies who have already debt-to-equity ratio of
40:60.

For example; if worth of business is PKR.100,000, then the maximum loan which
can be availed by allied bank would be PKR.40,000.

Consideration:
 Industry condition
 Past credibility (because they don’t fund startups)
 Product
 Market considerations
 Risk factors
 Revenues and cost of sales
 Country report on that particular industry.