Bank Pool Loan
Encyclopedia
A bank pool loan is a fairly new form of loan
, used by US based firms trading on public markets that need funding
of under $10,000,000. In a BPL, a group of Europe
an based bank
s (the pool), create a Europe
an firm who's sole purpose is to loan
money to a US based company
. Because this loan
to the Europe
an based bank is completely insured, the BPL does not have as high a risk if the loan is defaulted on. Additionally, the pool actually makes more annual interest
than if they were to loan
money traditionally. This allows US based firms to borrow as much as $10,000,000 completely interest
free as long as it is backed by collateral
of some sort (usually stock
). The Regulations require that the loan
be of "good value
" and so the newly formed Europe
an company
usually requires securities to back the loan
to pass this qualification.
As its initial intentions are to help induce Europe
an companies to invest abroad, it in fact has become a cheap way for low priced companies un the us over the counter
markets like the OTCBB and the Pink Sheets
to fund their companies by purposely defaulting on the loan
and forfeiting the shares.
for the past eight years. In order to encourage Europe
an based firms to invest in firms based in foreign nations, Universal banking regulations
have set forth that any European Union
based firm, which is invested in a non-European Union
member nations, which currently are not receiving international
aid or have had a significant change in government
in the past twenty years and borrow funds no greater than € 7,000,000 EUR or $ 9,874,058.49 USD from any individual
or group of EU member banking institutions
----
The BPL insurance
will only apply under the following circumstances:
If the loan is made to a firm based in a non EU member country.
The Loan is collateralized by some form of equity in the borrowers firm.
The Bank or group of banks involved with a given BPL must assign a central Administrator.
Other regulations set forth in the BPL guidelines.
Loan
A loan is a type of debt. Like all debt instruments, a loan entails the redistribution of financial assets over time, between the lender and the borrower....
, used by US based firms trading on public markets that need funding
Funding
Funding is the act of providing resources, usually in form of money , or other values such as effort or time , for a project, a person, a business or any other private or public institutions...
of under $10,000,000. In a BPL, a group of Europe
Europe
Europe is, by convention, one of the world's seven continents. Comprising the westernmost peninsula of Eurasia, Europe is generally 'divided' from Asia to its east by the watershed divides of the Ural and Caucasus Mountains, the Ural River, the Caspian and Black Seas, and the waterways connecting...
an based bank
Bank
A bank is a financial institution that serves as a financial intermediary. The term "bank" may refer to one of several related types of entities:...
s (the pool), create a Europe
Europe
Europe is, by convention, one of the world's seven continents. Comprising the westernmost peninsula of Eurasia, Europe is generally 'divided' from Asia to its east by the watershed divides of the Ural and Caucasus Mountains, the Ural River, the Caspian and Black Seas, and the waterways connecting...
an firm who's sole purpose is to loan
Loan
A loan is a type of debt. Like all debt instruments, a loan entails the redistribution of financial assets over time, between the lender and the borrower....
money to a US based company
Company
A company is a form of business organization. It is an association or collection of individual real persons and/or other companies, who each provide some form of capital. This group has a common purpose or focus and an aim of gaining profits. This collection, group or association of persons can be...
. Because this loan
Loan
A loan is a type of debt. Like all debt instruments, a loan entails the redistribution of financial assets over time, between the lender and the borrower....
to the Europe
Europe
Europe is, by convention, one of the world's seven continents. Comprising the westernmost peninsula of Eurasia, Europe is generally 'divided' from Asia to its east by the watershed divides of the Ural and Caucasus Mountains, the Ural River, the Caspian and Black Seas, and the waterways connecting...
an based bank is completely insured, the BPL does not have as high a risk if the loan is defaulted on. Additionally, the pool actually makes more annual interest
Interest
Interest is a fee paid by a borrower of assets to the owner as a form of compensation for the use of the assets. It is most commonly the price paid for the use of borrowed money, or money earned by deposited funds....
than if they were to loan
Loan
A loan is a type of debt. Like all debt instruments, a loan entails the redistribution of financial assets over time, between the lender and the borrower....
money traditionally. This allows US based firms to borrow as much as $10,000,000 completely interest
Interest
Interest is a fee paid by a borrower of assets to the owner as a form of compensation for the use of the assets. It is most commonly the price paid for the use of borrowed money, or money earned by deposited funds....
free as long as it is backed by collateral
Collateral (finance)
In lending agreements, collateral is a borrower's pledge of specific property to a lender, to secure repayment of a loan.The collateral serves as protection for a lender against a borrower's default - that is, any borrower failing to pay the principal and interest under the terms of a loan obligation...
of some sort (usually stock
Stock
The capital stock of a business entity represents the original capital paid into or invested in the business by its founders. It serves as a security for the creditors of a business since it cannot be withdrawn to the detriment of the creditors...
). The Regulations require that the loan
Loan
A loan is a type of debt. Like all debt instruments, a loan entails the redistribution of financial assets over time, between the lender and the borrower....
be of "good value
Value (economics)
An economic value is the worth of a good or service as determined by the market.The economic value of a good or service has puzzled economists since the beginning of the discipline. First, economists tried to estimate the value of a good to an individual alone, and extend that definition to goods...
" and so the newly formed Europe
Europe
Europe is, by convention, one of the world's seven continents. Comprising the westernmost peninsula of Eurasia, Europe is generally 'divided' from Asia to its east by the watershed divides of the Ural and Caucasus Mountains, the Ural River, the Caspian and Black Seas, and the waterways connecting...
an company
Company
A company is a form of business organization. It is an association or collection of individual real persons and/or other companies, who each provide some form of capital. This group has a common purpose or focus and an aim of gaining profits. This collection, group or association of persons can be...
usually requires securities to back the loan
Loan
A loan is a type of debt. Like all debt instruments, a loan entails the redistribution of financial assets over time, between the lender and the borrower....
to pass this qualification.
As its initial intentions are to help induce Europe
Europe
Europe is, by convention, one of the world's seven continents. Comprising the westernmost peninsula of Eurasia, Europe is generally 'divided' from Asia to its east by the watershed divides of the Ural and Caucasus Mountains, the Ural River, the Caspian and Black Seas, and the waterways connecting...
an companies to invest abroad, it in fact has become a cheap way for low priced companies un the us over the counter
Over-the-counter (finance)
Within the derivatives markets, many products are traded through exchanges. An exchange has the benefit of facilitating liquidity and also mitigates all credit risk concerning the default of a member of the exchange. Products traded on the exchange must be well standardised to transparent trading....
markets like the OTCBB and the Pink Sheets
Pink Sheets
OTC Markets Group, Inc., informally known as "Pink Sheets", is a private company that provides services to the U.S. over-the-counter securities market including electronic quotations, trading, messaging, and information platforms. According to the U.S. Securities and Exchange Commission, OTC...
to fund their companies by purposely defaulting on the loan
Loan
A loan is a type of debt. Like all debt instruments, a loan entails the redistribution of financial assets over time, between the lender and the borrower....
and forfeiting the shares.
Details
Bank pool loans (BPL) have only been in existenceExistence
In common usage, existence is the world we are aware of through our senses, and that persists independently without them. In academic philosophy the word has a more specialized meaning, being contrasted with essence, which specifies different forms of existence as well as different identity...
for the past eight years. In order to encourage Europe
Europe
Europe is, by convention, one of the world's seven continents. Comprising the westernmost peninsula of Eurasia, Europe is generally 'divided' from Asia to its east by the watershed divides of the Ural and Caucasus Mountains, the Ural River, the Caspian and Black Seas, and the waterways connecting...
an based firms to invest in firms based in foreign nations, Universal banking regulations
Bank regulation
Bank regulations are a form of government regulation which subject banks to certain requirements, restrictions and guidelines. This regulatory structure creates transparency between banking institutions and the individuals and corporations with whom they conduct business, among other things...
have set forth that any European Union
European Union
The European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...
based firm, which is invested in a non-European Union
European Union
The European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...
member nations, which currently are not receiving international
International
----International mostly means something that involves more than one country. The term international as a word means involvement of, interaction between or encompassing more than one nation, or generally beyond national boundaries...
aid or have had a significant change in government
Government
Government refers to the legislators, administrators, and arbitrators in the administrative bureaucracy who control a state at a given time, and to the system of government by which they are organized...
in the past twenty years and borrow funds no greater than € 7,000,000 EUR or $ 9,874,058.49 USD from any individual
Individual
An individual is a person or any specific object or thing in a collection. Individuality is the state or quality of being an individual; a person separate from other persons and possessing his or her own needs, goals, and desires. Being self expressive...
or group of EU member banking institutions
----
The BPL insurance
Insurance
In law and economics, insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment. An insurer is a company selling the...
will only apply under the following circumstances:
If the loan is made to a firm based in a non EU member country.
The Loan is collateralized by some form of equity in the borrowers firm.
The Bank or group of banks involved with a given BPL must assign a central Administrator.
Other regulations set forth in the BPL guidelines.