A personal loan is an amount of money you can borrow to use for a variety of purposes. For instance, you may use a personal loan to consolidate debt, pay for home renovations, or plan a dream wedding. Personal loans can be offered by banks, credit unions, or online lenders. The money you borrow must be repaid over time, typically with interest. Some lenders may also charge fees for personal loans.

To get a personal loan, you need to apply to a lender. Again, this can be a bank, credit union, or online personal loan lender. Generally, you would first complete an application. The lender reviews it and decides whether to approve or deny it. If approved, you’ll be given the loan terms, which you can accept or reject. If you agree to them, the next step is finalizing your loan paperwork. When that’s done, the lender will fund the loan, which means paying you the proceeds. Depending on the lender, these may arrive through a direct deposit into your bank account or a check. After the loan is funded, you can use the money as you see fit. You then have to begin repaying the loan according to the terms established in your loan agreement.

What is a business loan?

Business loans are unsecured financial assistance provided by banks and NBFCs in India. The primary aim of these is to support the urgent needs of your growing business. Most financial institutions offer term loans and flexi loans to cater to the business needs of a company. Business loans are also called commercial loans. All types of businesses such as a sole proprietorship, privately held company, partnership firms, self-employed individuals and retailers can avail these loans.

Start up business loans can go a long way in meeting essential requirements such as business expansions, dealer and vendor financing etc. Given that these are provided without any collateral or security, it makes it very easy to apply for a bank loan for business. Another attractive feature of business loan obtained by a company is that in the event of a loan default, the company can be liquidated to pay off the dues.

---

Loan Provider

Banks are very useful loan provider for the small scale businesses. Banks provide loans at a lower cost than most other financial institutions. Banks usually ask for strong credit scores, collaterals, personal guarantees or healthy financial statements so as to sanction loans to the business concerns. It takes serious of effort for a business entity to get loan sanctioned from a bank and also it requires a substantial amount of time for this. The loan sanction process may take as much as three months time.Bank loans are utilized by a business to invest in capital assets or inventories or for the purpose of meeting the working capital requirements. Bank loans are a reliable method of financing businesses of small and medium size. The covenants of a bank loan may be strict. A business house has to consider both the benefits and drawbacks of bank loan before opting for it.

What Is a Loan?

Banks are very useful loan provider for the small scale businesses. Banks provide loans at a lower cost than most other financial institutions. Banks usually ask for strong credit scores, collaterals, personal guarantees or healthy financial statements so as to sanction loans to the business concerns. It takes serious of effort for a business entity to get loan sanctioned from a bank and also it requires a substantial amount of time for this. The loan sanction process may take as much as three months time.Bank loans are utilized by a business to invest in capital assets or inventories or for the purpose of meeting the working capital requirements. Bank loans are a reliable method of financing businesses of small and medium size. The covenants of a bank loan may be strict. A business house has to consider both the benefits and drawbacks of bank loan before opting for it.

A loan is when one receives finance from a bank, friend, or some finance entity with the assurance of returning it in the future along with the principal as well as the interest. Principal is the borrowed amount, and interest is the charge on receiving the loan. Considering that lenders take a risk by offering you the loan facility and the fear that you may not be in a position to repay the same,, they have to protect the losses by charging an amount in the form of interest. Mostly loans are categorised as secured or unsecured. Secured loans pose the need for promising an asset such as a car or house as a loan collateral in case the borrower defaults, or does not repay the loan. In this case, the lender gets the possession of the asset. Unsecured loans are sought after, yet less common. In case the borrower fails to pay back an unsecured loan, lender cannot take anything in return.

Pros Of Bank Loan

Interest on a bank loan is a tax deductible item. Interest on a bank loan is a permissible item of expense in the Income Tax Return of a business or a nonprofit making concern.

A bank which provides loan to a business concern is a creditor of such entity. Bank loan is an item of liability and not an equity for the borrower concern. Therefore, a lender bank does not have any share in the ownership and management of the affairs of the borrower.

---