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. .
More guaranteed loans for Freddie and Fannie
Freddie Mac and Fannie Mae need more, nevertheless, in guaranteed loans. According to ABC, Freddie has lost about $ 6 billion for the second quarter of this year alone. The firm is asking for one more $ 1.8 billion. The twin mortgage giants are struggling, and both have less than two years to get their affairs in order. At that point, Treasury Secretary Geithner won’t write any more checks.
Credit scores affect huge corporations too
One of the motivations for Ford is the credit rating for the agency improves as they pay off debt. Just like paying off a credit card improves your credit worthiness, it works for big businesses too.
Further reading
online.wsj.com/article/SB20001424052748703589404575417491742322262.html
abcnews.go.com/Business/wireStory?id=11356950
