What does the term spread mean in business?

A commercial loan is a long-term debt that a business can take out when they need funds for a major investment. A commercial bank might offer a multi-million dollar loan to a growing small business, while a savings bank might offer a smaller loan to an existing, established business. Whatever the size of your loan, the lender will look at your financial statement to make sure that you can pay it off.

What does the term spread mean in layman terms?

The term spread refers to the difference between the cost of a loan and the current value of the underlying asset securing the loan. For example, you may want to borrow money to make improvements on your home. Let’s say that you owe $200,000 on your home and its current value is $200,000. That would be your loan to value ratio. If you put the maximum amount you could borrow toward improvements, which is likely to be $200,000, your loan to

What does the term spread mean in business terms?

The interest rate on a loan is the amount of money an institution charges you when you borrow money. It’s a key financial function in the world of finance. The interest rate you pay is based on the bank’s calculation of what it would cost them to finance the loan, including the risk of default. The difference between the interest rate that a bank charges you and the interest rate on the bonds they offer you is known as the spread. A bank will often offer different loan rates

What does the term spread mean in basic terms?

A loan's spread is simply the difference between the interest rate the lender charges to provide capital to you and the interest rate the bank pays on its own money. If the interest rate on the bank's money is higher than the interest rate on the loan, you will have a positive spread. If the interest rate on the bank's money is lower than the interest rate on the loan, you will have a negative spread.

What does the term spread mean in business terms and definitions?

The term spread refers to the difference between the interest you pay on your debt and the interest rates available in the market. If you have a $100,000 loan on a property valued at $100,000, and you take out a $100,000 bank loan, your debt-to-asset ratio would be 100 percent. If you owe more than your property is worth, you have a mortgage spread.