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Definition of 'Bow Tie Loan'
A short-term, variable-rate loan in which unpaid interest charges above a predetermined interest rate are deferred. A variable-rate loan is a loan in which the interest rate fluctuates in response to market interest rates. So, when bow tie loans are issued, a predetermined interest rate is set and whenever the market rate goes up past that rate, interest payments for investors are deferred until the end of the loan's maturity.
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Investopedia explains 'Bow Tie Loan'
For example, let's say a company wants to take out a bow tie loan of $100,000, current interest rates are 15% and the lending company has set a limit interest rate of 22%. At 22%, the company is paying $22,000 in interest payments. In the event that interest rates rise above 22% to, say, 26%, the interest payments will rise from $22,000 to $26,000. In this case, the company is still liable for $22,000 of interest payments, but the difference of $4,000 ($26,000 - $22,000) is deferred until the loan's maturity date.
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Search results for 'Bow Tie Loan'
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http://financialedge.investopedia.com/financial-edge/1111/5-Doom-And-Gloom-Wall-Street-Prophets.aspx
... When you become famous for wearing a bow-tie, they'll also remember who you
are. Jim Rogers has both of those working for him in spades. ...
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http://financialedge.investopedia.com/financial-edge/1211/How-To-Decorate-On-A-Budget.aspx
... Fill them in a basket, tie a plaid ribbon around the basket and it creates a warm,
holiday decoration. ... Add a bow and you have a useful, beautiful handmade gift ...
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