Compensating Balances Are Frequently a Part of Revolving Lending Arrangements

question 80

Essay

Compensating balances are frequently a part of revolving lending arrangements with banks,yet they add to the cost of financing for the borrower.Why,then,would borrowers agree to such terms?
What other types of alternative financing are available?

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Definitions:

Corporate

Relating to a large company or group of companies authorized to act as a single entity.

Body Positions

The posture or arrangement of the body, often communicating nonverbal cues or aiding in task performance.

Uncrossed Arms

A body language cue indicating openness, receptiveness, or a non-defensive attitude.

Leaning Forward

A body language gesture that indicates interest, attentiveness, and engagement in the ongoing communication or situation.