Investopedia

Continue to Site »

Stretch Loan

Filed Under »
Dictionary Says

Definition of 'Stretch Loan'

A loan that is extended to another party, either an individual or subsidiary company, that requires a large proportion of the party's cash flows to service the loan on a monthly basis. Usually, this benchmark is 50% of the party's gross income or more.
Investopedia Says

Investopedia explains 'Stretch Loan'

Stretch loans are extended to those individuals or companies that are in dire need of financing. Due to the relatively higher default and financial risk, lenders may require collateral or a large initial down payment before making a stretch loan.

Articles Of Interest

  1.

    The Importance Of Your Credit Rating

    A great starting point for learning what a credit score is, how it is calculated and why it is so important.

  2. Payday Loans Don't Pay

    Hold too tightly to this rescue line and you'll soon be drowning in debt.

  3. Why do companies issue debt and bonds? Can't they just borrow from the bank?

    Companies issue bonds to finance operations. Most companies can borrow from banks, but view direct borrowing from a bank as more restrictive and expensive than selling debt on the open market ...

  4. Making It Big On Wall Street

    Read about some of the most glamorous Wall Street jobs and what it takes to land one.

  5. Mezzanine Financing

    Learn about this alternative method of financing companies use to finance expansion.

  6. Promissory Notes: Not Your Average IOU

    These may be a handy way to borrow money, but this convenience does not come without risk.

  7. What would happen to a company's external fund requirements if it reduces the payout ratio, or if it suffers a decline in its profit margin?

    In short, the stronger the company's internal cash flow, and in turn cash position, the less the need to draw on an external fund. If internal cash flow or the retention ratio increases, external ...

  8. What is the difference between investment banks and merchant banks?

    Merchant banks and investment banks, in their purest forms, are different kinds of financial institutions that perform different services. In practice, the fine lines that separate the functions ...

  9. What is the difference between asset-based lending and asset financing?

    In the most common usage, the terms "asset-based lending" and "asset financing" refer to the same thing. Asset-based lending generally refers to a business using its assets as collateral for ...
comments powered by Disqus
Marketplace
Hot Definitions

  1. Fool In The Shower

    The notion that changes or policies designed to alter the course of the economy should be done slowly, rather than all at once.

  2. Pattern Day Trader

    An SEC designation for traders who trade the same security four or more times per day (buys and sells) over a five-day period, and for whom same-day trades make up at least 6% of their activity for that period.

  3. Cost-Push Inflation

    A phenomenon in which the general price levels rise (inflation) due to increases in the cost of wages and raw materials.

  4. Happiness Economics

    The formal academic study of the relationship between individual satisfaction and economic issues, such as employment and wealth.

  5. Affluenza

    A social condition arising from the desire to be more wealthy, successful or to "keep up with the Joneses." Affluenza is symptomatic of a culture that holds up financial success as one of the highest achievements.

  6. Icarus Factor

    The term Icarus factor describes a situation where managers or executives initiate an overly ambitious project which then fails. Fueled by excitement for the project, the executives are unable to reign in their misguided enthusiasm before it is too late to avoid the failure.
Trading Center