Bank of Linsdon lends $1,000,000 to SBC Techno Inc. with an understanding that the company will need to repay the loan in monthly installments of $25,000. SBC Techno Inc. successfully makes the monthly payments for two consecutive years. However, due to a financial crisis, it faces cash flow problems and eventually stops paying the installments. In this scenario, Bank of Linsdon is said to have a(n) _____.

Question

Quizplus · Accepted Answer

A non-performing loan (NPL) is a loan in which the borrower is not making the agreed-upon payments to the lender. In this scenario, since SBC Techno Inc. stops making payments due to financial difficulties, the loan becomes non-performing for Bank of Linsdon.

Bank of Linsdon Lends $1,000,000 to SBC Techno Inc