Corporate finance and personal finance are not as different as you would think. The businesses which need some guaranteed loans at a while, or at least a line of credit in case they need a short term installment loan are some of the biggest names out there. Even the Ford Motor Company got guaranteed loans eventually. Ford is in debt relief mode. Fannie Mae and Freddie Mac need guaranteed loans just to stay above water.
Ford gets guaranteed loans
During the worst of the recession, the Ford Motor Co. borrowed $ 23.5 billion to stay afloat and keep Ford from having to file bankruptcy and ask for bailout cash. Ford didn’t need a bailout, but only asked for lines of credit be set aside just in case. Not asking for emergency cash loans from the government was a wise business decision. . Sometimes just knowing you’ve the access to credit is a confidence boost, if you absolutely need a loan until payday.
Mortgage giants need more guaranteed loans
Meanwhile, Fannie Mae and Freddie Mac need more guaranteed loans from the government in order to stay solvent. According to ABC, Freddie has lost about $ 6 billion for the second quarter of this year alone. The money hemorrhaging firm is asking for another $ 1.8 billion from taxpayers. The twin mortgage giants are struggling, and both have less than two years to get their affairs in order. That’s when the Treasury Department’s teat will run dry.
Huge corporations have credit scores as well
Ford will improve the company’s credit history and get better deals on financing the more of their debt they pay off. The biggest corporations benefit from paying down debt, just as a regular person gets a better credit score when they settle their credit card.
Additional reading
online.wsj.com/article/SB20001424052748703589404575417491742322262.html
abcnews.go.com/Business/wireStory?id=11356950
