Forms and types of credit

A loan is a form of movement of loan or money capital. Forms and types of credit are closely interrelated with its structure and essence.

No matter how the relationship between the borrower and the lender changes in relation to the loan value, the reflection of the credit content as an economic category as a whole is its form.

Types and forms of credit have passed a long historical path of development, ranging from usurious loans and ending with modern bank loans.

The production relations that are formed when transferring to one another for temporary use by economic entities, the state, organizations or individual citizens on terms of repayment, are expressed through a loan. No matter what the forms and types of credit, they must reflect the essence of the loan. Credit has become an integral part of economic development.

Basic forms and types of credit

The commodity form is used in such cases as the rental of things, the sale of goods in installments, the rental of property, including equipment leasing. And the loaned funds in these credit transactions should be provided and returned in the form of commodity values.

The monetary form is the most typical and prevails in the modern economy. This loan must also be returned in cash, so that the transaction has a corresponding form.

Mixed form is more often used in developing countries, when for periodic loans they are periodically calculated by the supply of goods, say, raw materials or agricultural products.

The forms of credit are also differentiated according to the borrower's target needs. Basically it is productive and consumer.

The latter is used for the purpose of circulation and production.

The consumer form, unlike the productive one, uses the population for consumption purposes. Since no new value is created at the expense of consumer credit, in addition to individual citizens, enterprises that "eat" the created value can receive it.

Distinguish forms of lending also depending on who acts as a lender.

Bank loan

This form is based on the use of only money capital, while the bank:

• Operates, as a rule, more attracted resources, rather than its capital;

• Lends to the unoccupied capital;

• Lends money as capital.

A bank loan is issued for a loan interest, which is determined on a mutually beneficial basis by the subjects of credit relations and fixed in the loan agreement.

Commercial loan

It is issued during the registration of a bargain in a commodity form and is made out in the form of a promissory note, a promissory note that is paid through a commercial bank. Currently, the functions of a bill are more often performed by a standard contract. Commercial credit has fundamental differences from banking:

• In the role of creditor is not a specialized financial institution, but any legal entity associated with the production or sale of services and goods;

• Is provided in the form of a commodity;

• The charge for this loan is included in the price of the goods when entering into a transaction, etc.

Forms and types of credit are distinguished by the detailed nature of its characteristics in terms of organizational and economic characteristics, which is inherent in the types of credit. In Russia, they are classified based on the following indicators:

- the stage of reproduction, serviced by a loan, say, a loan for new means of production ;

- lending facilities, for example, for the purchase of various goods;

- sectoral focus:

• agricultural;

• Industrial credit;

• Trade credit.

- its security:

• By nature - with direct and indirect support;

• By the degree of security - without security, with sufficient (full) and insufficient (incomplete) security.

- urgency of lending:

• Long-term;

• Medium-term;

• Short-term;

• Loans and others.

A variety of forms and types of credit make it possible to use it for large enterprises, as well as small production and trade structures, the state and individual citizens.