compensating balance (Meaning)
compensating balance (n)
a minimum credit balance that a bank may require a borrower to keep on deposit as a condition for granting a loan; a common requirement for establishing a line of credit at a bank
Synonyms & Antonyms of compensating balance
No Synonyms and anytonyms found
compensating balance Sentence Examples
- The bank required a compensating balance for the business loan, ensuring a minimum amount remained in the account.
- As part of the financing agreement, the company had to maintain a compensating balance equivalent to 10% of the loan amount.
- The lender agreed to waive the compensating balance requirement in exchange for a higher interest rate.
- The borrower needed to maintain a compensating balance in their account to avoid additional fees.
- The compensating balance served as collateral for the line of credit extended by the bank.
- Failure to maintain the required compensating balance could result in penalties or increased interest rates.
- The financial institution offered favorable terms for loans with a compensating balance arrangement.
- The compensating balance helped mitigate the lender's risk by ensuring funds were available if needed.
- Businesses often negotiate the terms of compensating balances to align with their cash flow needs.
- The bank adjusted the compensating balance requirement based on the borrower's creditworthiness and financial stability.
FAQs About the word compensating balance
a minimum credit balance that a bank may require a borrower to keep on deposit as a condition for granting a loan; a common requirement for establishing a line
No synonyms found.
No antonyms found.
The bank required a compensating balance for the business loan, ensuring a minimum amount remained in the account.
As part of the financing agreement, the company had to maintain a compensating balance equivalent to 10% of the loan amount.
The lender agreed to waive the compensating balance requirement in exchange for a higher interest rate.
The borrower needed to maintain a compensating balance in their account to avoid additional fees.
