A) Bank Loans and Overdrafts

There are two principal ways in which a businessman can borrow money from his bank: by means of a loan and by means of an overdraft.

An overdraft is "a sum of money drawn from a bank by a customer that is more than the amount he holds in his account with the bank". Permission of the bank has to be obtained for this facility, and interest is charged on the outstanding amount.

Here is an extract from Statement of Terms and Conditions for Non-U.S. Banks of Citibank, N.Y.:

"Customer? will receive overdraft interest statements monthy. However, under exceptional temporary circumstances, statements may be issued daily. Charges for overdrafts will be calculated in accordance with normal backing practice at Citibank, New York."

When the bank makes a loan, a separate loan account is opened at the bank in the borrower's name. The amount of the loan is debited in the loan account and credited in the customer's current account. Interest is charged on the full amount of the loan even though the borrower might not draw on the full amount immediately.

Because bank funds must be kept fluid, loans are nearly always short term, and a bank will not lend money to a customer unless it knows that the money can be repaid quickly. Normally the bank likes to have its loans repaid or its overdrafts charged, within a year.

Words you may need:

to charge interest взимать проценты

outstanding amount (зд.) сумма превышения

extract n выдержка, отрывок

terms and conditions условия

statement n выписка

temporary adj временный

charges n pl расходы, издержки

calculate v рассчитывать

separate adj отдельный

to keep fluid (зд.) работать (о деньгах)