What is a bridge loan? Is this loan legal?

In the financial market, there are many different loan methods. In addition to common mortgage loans and credit loans, there is also a type of loan called a bridge loan. So what is a bridge loan? Are bridge loans legal? Let’s take a look below.

Bridge loan

A bridge loan refers to a short-term loan, usually a bank or other financial institution that provides temporary or short-term borrowing to the lender. Bridge loans are an effective tool for directly capitalizing purchase opportunities, and fast payback is the biggest advantage of bridge loans.

Bridging loans are in a legal gray area. They are legal if the loan contract does not restrict them to a specific purpose or states that they cannot be used for equity or asset acquisitions. In addition, bridge loans have a shorter term, no longer than one year, relatively high interest rates, and are secured by some collateral such as real estate or inventory.

Are "bridge loans" legal?

Since it can be called bridge financing and not private lending, it is qualitatively a business activity. Since it is a business activity, you must first have business qualifications, but most of them do not. Even if there is, the state has stipulated the interest rate. If it exceeds 15.4, it is considered a loan, and if it exceeds 36, it is called an over-interest loan. Documents were issued in 2019. Generally, the bridge funds on the market range from 1,000 to 3,000 per day. Now it takes that long for banks to decompress, re-mortgage and disburse loans. Tell me, is this illegal lending? It’s not just illegal lending.

Crossing the bridge is also a kind of loan. If the interest rate is within the national red line, it is legal. In fact, the interest for crossing the bridge is calculated on a daily basis, usually ranging from 1,000 to 3,000 per day. Depending on the market situation, if calculated monthly, the interest will definitely exceed 3 cents. But the time to cross the bridge is usually relatively short, a few days, more than 10 days. I think this is a good tool. Borrowers cannot repay their loans and need to find funds to bridge the gap and renew their loans. This is actually a good thing to promote economic development. The loan overdue rate has been reduced. Specific issues will be considered on a case-by-case basis and it depends on how the judge determines it. Otherwise, if there were no such bridge loans, the loan delinquency rate would probably increase, which would not necessarily be a good thing. It is best to apply for relevant lending qualifications before engaging in this business and regulate the risks of private lending in Kazakhstan.

Is a bridge advance considered illegal lending?

First of all, bridge financing refers to the act of providing funds to bank lenders to help them borrow money from the bank and collect interest or handling fees. This behavior was not illegal before 2019 and was Scope of civil adjustments.

But starting from October 21, 2019, illegal lending is not only illegal but also constitutes the crime of illegal business operations among criminal offenses. The following are some relevant provisions of this regulation:

Opinions of the Supreme People's Procuratorate, the Ministry of Public Security, and the Ministry of Justice on Several Issues Concerning the Handling of Criminal Cases of Illegal Lending

In order to punish illegal lending criminal activities in accordance with the law, Effectively maintain the order of the national financial market and social harmony and stability, effectively prevent gang-related and other illegal and criminal activities caused by illegal lending, protect the legitimate rights and interests of citizens, legal persons and other organizations, and in accordance with the Criminal Law, Criminal Procedure Law and relevant judicial interpretations and norms. According to the provisions of the document, the following opinions are put forward on several issues in handling criminal cases of illegal lending:

1. Violating national regulations, without approval of the regulatory authorities, or exceeding the scope of business, for the purpose of profit, regularly If the society extends loans to unspecified targets and disrupts the order of the financial market, and the circumstances are serious, it will be convicted and punished for the crime of illegal business in accordance with the provisions of Article 225 (4) of the Criminal Law.

The "regularly extending loans to unspecified objects in society" in the preceding paragraph refers to lending funds to unspecified people (including units and individuals) more than 10 times in two years in the form of loans or other names. .

If the repayment period is extended after the loan expires, the number of loan disbursements will be calculated as one.

2. Any illegal lending behavior that complies with the provisions of Article 1 of these Opinions at an actual annual interest rate exceeding 36, and any of the following circumstances falls under the category of "serious circumstances" stipulated in Article 225 of the Criminal Law ”, but if the actual annual interest rate of a single illegal lending act does not exceed 36, it shall not be included in the conviction and sentencing:

(1) If the cumulative amount of illegal lending by an individual exceeds 2 million yuan, the cumulative amount of illegal lending by the unit The total amount of illegal income of an individual is more than 800,000 yuan, and the total amount of illegal income of an organization is more than 4 million yuan;

(3) ) The total number of illegal loan recipients for individuals is more than 50, and the total number of illegal loan recipients for units is more than 150;

(4) Serious consequences such as the death or mental disorder of the borrower or his close relatives are caused.

Advancing funds to bridge is of the same nature as lending. First of all, it depends on whether the interest exceeds 3 cents. If it exceeds 3 cents, it is illegal. If it does not exceed, it is normal. Then you have the obligation and right to repay the loan and interest.

At the same time, it also depends on whether it is an individual or an organization. If it is an individual, it cannot exceed 200 million. If it exceeds, it is an illegal business crime. If it is an organization, it cannot exceed 10 million. If it exceeds, it is also an illegal business. crime.

If it is a licensed institution lending money, then it is a legal business behavior to lend any amount, but the prerequisite is that the interest rate cannot exceed 3 cents. According to the current lending market environment, lenders will avoid legal risks.

In the end, even if it is an illegal business crime, the borrower must repay the principal and legal interest. After all, borrowing and repaying money is a matter of course, but the lender must go to jail.

This is a good professional question. In fact, bridge advance funds have always been in a gray area. Whether it is illegal lending is worthy of discussion.

Bridge advance is a kind of ultra-short-term transitional loan with a wide range of application scenarios, such as corporate working capital loans, mortgage loans in personal housing sales, credit card repayments, etc. Among them, corporate working capital loans are the best example.

On October 21, 2019, the Supreme People's Court, the Supreme People's Procuratorate, the Ministry of Public Security, and the Ministry of Justice jointly issued the "Opinions on Several Issues Concerning the Application of Laws in Handling Criminal Cases of Illegal Lending". The "Opinions" clarified the quantitative standards for enterprises and individuals who do not have relevant financial loan qualifications to be suspected of illegal business crimes: the annual interest exceeds 36, the cumulative amount exceeds 10 times within 2 years, and the cumulative loan amount exceeds 2 million.

Compared with the "Opinions", the business characteristics of bridge advance funds are very embarrassing. In fact, most of them are illegal lending.

1. Qualifications of the party providing the capital. Because the bridge loan period is short and there is no clear period of fund use in advance, banks and formal loan companies are far less fast and flexible than private institutions and individuals. At present, the parties that advance funds are mainly private institutions or individuals, which basically do not have relevant financial loan qualifications and fall within the scope of private lending.

2. Interest. The capital fee agreed by both parties in the bridge advance business is actually the short-term loan interest. The time for bridge advance payment is very short, and the fee is generally calculated based on the number of days, which is basically between one thousandth and three thousandths per day. There are also fees lower than one thousandth or higher than three thousandths, but relatively Rare. Calculated at one thousandth per day, the annual interest is 36, which has reached the maximum limit stipulated in the "Opinions". In other words, as long as the daily fee exceeds one thousandth, the bridge advance is illegal.

3. Frequency of lending. Capital tends to be profitable. Because bridge advances are ultra-short-term, they often don’t last more than 7 days or even three days. After an advance business ends, the funds cannot be idle and you have to look for the next business. It takes one year Cumulatively, the number of loans generally exceeds 10 times.

4. The scale of lending. The amount of bridge advance funds varies, ranging from credit card repayments to corporate loans ranging from tens of millions to hundreds of millions. In fact, most of them far exceed the cumulative limit of 2 million.

Comparing the above items, you can find that there is only one legal way, that is: to obtain a small loan or pawn license, the cost of each business does not exceed one thousandth per day, and the amount of each business does not exceed It exceeds 10% of the registered capital, but a new problem arises. Since the bridge advance is an ultra-short-term pure credit loan with a short term and high risks, if these restrictions are fully followed, the funds will lose momentum and the enthusiasm will be greatly reduced.

However, bridge advances are a real need. From a positive perspective, they help small and medium-sized enterprises and individuals maintain stable cash flow, so that loans can be circulated without breaking the capital chain. Because it is a very short-term loan, the cost is usually calculated on a daily basis. Fortunately, the term is short and the total cost is not high. As long as the bridge is successfully crossed, the company can and is willing to bear it. In the once popular TV series "In the Name of the People", Dafengchang Bank provided a bridge loan, and Shanshui Group provided 50 million bridge funds with a daily interest of 4% per thousand. It took 6 days and paid 1.2 million, which is converted into monthly interest for 12 years. It’s already reached 144, and Boss Cai of Dafeng Factory is still very grateful.

On the one hand, there is indeed a large amount of actual demand, and on the other hand, there are restrictions in relevant laws and regulations. Therefore, the bridge advance business has actually been in a gray area.

How to solve this knot? We have to find ways from the financial support policy level.

1. Banks and other financial lending institutions are encouraged to directly renew corporate or personal loans when they expire. That is, after the loan expires, there is no need to refinance the loan and directly go through the loan renewal procedures. If direct loan renewal can be truly implemented, Every loan will be good news to the majority of small, medium and micro enterprises, and most bridge advance business will lose market demand, which solves the problem from the root.

2. Promote the establishment of professional bridge advance funds. A bridge advance fund shall be established by industry authorities, park management agencies, etc. to provide interest-free or low-interest bridge advance funds for eligible private small, medium and micro enterprises.

Crossing the bridge is also a kind of loan. If the interest rate is within the national red line, it is legal.

In fact, interest is calculated on a daily basis when crossing the bridge. Generally, the interest rate ranges from 1,000 to 3,000 cents per day. Depending on the market situation, if calculated monthly, the interest will definitely exceed 3 cents. But the time to cross the bridge is usually relatively short, a few days, more than 10 days. I think this is a good tool. Borrowers cannot repay their loans and need to find funds to bridge the gap and renew their loans. This is actually a good thing to promote economic development. The loan overdue rate has been reduced. Specific issues will be considered on a case-by-case basis and it depends on how the judge determines it.

Otherwise, if there were no such bridge loans, the loan overdue rate would probably increase, which would not necessarily be a good thing. It is best to apply for relevant lending qualifications before engaging in this business and regulate the risks of private lending in Kazakhstan.

It is legal if the interest rate does not exceed the legal limit; as a long-term business operation, corresponding financial permission is required.

Those professional lenders, false lawsuits, and routine loans should be severely punished. Once discovered, all illegal gains and property involved should be confiscated, and sentencing should be based on the amount involved. These talents are the main negative factors affecting social stability.

The Zhengzhou market initially scored 3 points per month, but now the rectification requirements for legal compliance have reached 1 point and 8 points per month

Then the question comes, regarding the customer’s qualifications and credit report It was very important. I had some money that was urgently needed to cross the bridge and had nowhere to go, so I borrowed it anyway.

What to do if there are no more people in this industry who need to advance funds?

Currently, the licensed institutions on the market that are generally used for bridge advance funds are small loans or pawns. These two licenses are not allowed. High and easy to operate. Personal lending carries the risk of imprisonment.

As long as the company is qualified for financial loans, its actions are legal. However, generally the interest on bridge advance funds is higher than the annualized rate of 36. So, this depends on your own needs.

Is it illegal for a bank account manager to help customers cross a bridge to collect benefits?

It is illegal for a bank account manager to help customers cross a bridge to collect benefits.

In a general sense, a bridge loan is a short-term loan and a transitional loan. Bridge loans are an effective tool for directly capitalizing purchase opportunities, and fast payback is the biggest advantage of bridge loans.

Bridge loans have a short term, up to one year, relatively high interest rates, and are secured by some collateral such as real estate or inventory.

Responsibilities of bank account manager:

1. Responsible for establishing and maintaining bank customer relationships.

2. Responsible for completing the sales targets of corresponding bank products and services.

3. Responsible for pre-sales and after-sales coordination.

4. Responsible for establishing and maintaining good cooperative relationships with relevant institutions of cooperative banks.

5. Responsible for participating in meetings and negotiations and coordination of affairs related to banking business.

Is it illegal to apply for a bridge loan?

Bridge loans are in a legal gray area. If the loan contract does not restrict it to a specific purpose, or indicates that it cannot be used for equity or asset acquisitions, it is Legal.

Legal basis:

Article 1 of the "Regulations of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trial of Private Lending Cases" refers to natural persons, legal persons, and other The act of financing between organizations and among themselves.

Are bridge loans legal? This article will teach you about bridge loans

In the TV series "In the Name of the People" which hit the circle of friends some time ago, there is a plot that mentions bridge loans. Many laypeople will ask what a bridge loan means. Is a bridge loan legal? Today I will give you a comprehensive introduction from its definition, characteristics, security, and risks.

What is a bridge loan?

A bridge loan means that after financial institution A obtains the loan project, it is unable to operate due to a temporary lack of funds, so it consults with financial institution B to let It helps release funds, and when financial institution A has funds in place, B withdraws. For B, this loan is a so-called bridge loan.

If you don’t understand the above introduction, let’s give an example: Cai Chenggong pledged the equity of Dafeng Factory to Shanshui Group for a bridge loan at a price of 50 million, with a daily interest rate of 4‰ and a term of 6 days, and stated that he would repay it to Shanshui Group after receiving the loan from Jingzhou Commercial Bank. But afterwards the bank changed its mind and could not get the loan, resulting in Dafeng Factory being unable to repay the loan. The bridge loan was reduced to interest after the interest was compounded.

The legality of bridge loans

Bridge loans are in a legal gray area. If the loan contract does not restrict it to a specific purpose, or indicates that it cannot be used for equity or asset acquisitions, it is legal. of.

Features of bridge loans

1. High return on capital, corresponding to higher loan interest rates, which are 2 to 5 higher than ordinary loan interest rates;

2. It has high gold content and can play a supporting and levering role.

Risk of bridge loan

1. Business risk

The interest on this bridge loan that Cai Chenggong borrowed from Shanshui Group was as high as 1.2 million, which shows the cost How high. According to surveys, the monthly interest rate of bridge loans is generally around 2-4, which translates into an annual interest rate of approximately 24-48. Such a high loan interest rate can clearly put a lot of pressure on repayers.

2. Financial risks

Bridging loans involve the interests of many parties. Similarly, taking the case of Cai Chenggong, his bridge loan involves both the interests of Dafeng Factory and The interests also involve the interests of Shanshui Group and banks. Therefore, once a bank withdraws loans, it is easy to risk a capital rupture, and many companies will go bankrupt or close down as a result.

3. Moral hazard among bank employees