Corporate finance and personal finance aren’t as different as you would think. Numerous of the largest corporations need guaranteed loans, or lines of credit or short term loans at some point. Even Ford Motor Co got guaranteed loans a few years ago. Ford is getting out of debt in double quick time. Meanwhile, Freddie Mac and Fannie Mae need more guaranteed loans to stay afloat.
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. Ford didn’t need a bailout, but only asked for lines of credit be set aside just in case. It turned out not asking for emergency money from the government at that moment panned out. While Chrysler and General Motors were figuring things out, Ford’s sales went up 22 percent, according to the Wall Street Journal. Sometimes just knowing you are able to borrow can give a boost of confidence; some individuals like knowing they can get a loan until payday if they really need it.
Mortgage giants need more guaranteed loans
Freddie Mac and Fannie Mae need more in taxpayer funded guaranteed loans. Freddie, as outlined by ABC, lost $ 6 billion this last quarter already. The firm is asking for an additional $ 1.8 billion. Freddie and Fannie are struggling, and they have until 2012 to get their affairs in order. That’s when the Treasury Department’s teat will run dry.
Huge companies 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. The biggest corporations benefit from paying off debt, just as a regular person gets a better credit rating when they pay down their credit card.
online.wsj.com/article/SB20001424052748703589404575417491742322262.html
abcnews.go.com/Business/wireStory?id=11356950
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