Question

3. ABC Boat Sales Ltd. sells and services recreational boats. The only shareholder of this business is Jerry Lin. Mr. Lin is very rich from other business ventures he was successful in in the past. ABC is trying to negotiate a loan with RBC Bank for $250,000. The Bank is worried about whether ABC will be able to pay the loan. If you were advising RBC, what ideas could you suggest to reduce the risk inn lending money to ABC? (10 marks)

Answer 1

If i am advising rbc bank ,i suggest him to give give loan to mr jeery lin instead of abc boat sales ltd . as given me jerry lean is only shareholder of abc boat ltd , it is good for both jerry lin as they get more share of abc ltd by providing loan amount to abc boat ltd and bank dont need to worry about risk inn lending money as mr lin is very rich from other business he was succesful in past .

other possible solution is to give loan abc boat ltd make jeryy linn as gurrantter in loan agreement .