Corporate finance and personal finance are not as different as you would think. Many of the largest businesses need guaranteed loans, or lines of credit or short term loans at some point. Even the Ford Motor Company got guaranteed loans at some point. Ford is in debt relief mode. Freddie Mac and Fannie Mae need more guaranteed loans just to scrape by.
Guaranteed loans for Ford
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. During the vehicle bailout, Ford didn’t need any auto loans, but merely asked for lines of credit as a contingency. Not asking for emergency cash loans from the government was a wise business decision. As outlined by the Wall Street Journal, Ford’s sales shot up 22 percent as GM and Chrysler floundered. .
Mortgage giants need more guaranteed loans
Freddie Mac and Fannie Mae need more in taxpayer funded guaranteed loans. Freddie, according to ABC, lost $ 6 billion this last quarter already. They’re asking for another $ 1.8 billion. Freddie and Fannie are struggling, and they have until 2012 to get their affairs in order. At that point, Treasury Secretary Geithner won’t write any more checks.
Huge corporations have credit scores as well
One of the motivations for Ford is that the credit rating for the agency improves as they pay back debt. It’s like an individual paying off their credit card to improve their credit score; it works for the biggest corporations too.
Discover more information on this subject
online.wsj.com/article/SB20001424052748703589404575417491742322262.html
abcnews.go.com/Business/wireStory?id=11356950
