Bank Loan : A Home Bank Loan

A business loan is a loan specifically intended for business purposes. As with all loans, it involves the creation of a debt, which will be repaid with added interest. There are a number of different types of business loan, suited to the requirements of different types of business such as bank loans, mezzanine financing, asset-based financing and invoice financing.A bank loan is obtained from a bank and may be either secured or unsecured. For secured loans, banks will require collateral, which may be lost if repayments are not made. The bank will probably wish to see the business’s accounts, balance sheet and business plan, as well as studying the principals' credit histories. Many smaller businesses are now however turning towards Alternative Finance Providers who are offering a number of advantages and reasons to seek business finance elsewhere.  it has become increasingly difficult for SMEs to obtain traditional finance from banks. An alternative option is invoice discounting or factoring, whereby the company borrows against its outstanding invoices, with the ability to obtain funds as soon as new invoices are created, but it is often questioned which option is best for your business – factoring or discounting?.[citation needed] The finance company charges interest on the loan until the invoice is paid, as well as fees if the factoring option is chosen, in which case the factoring company takes ownership of the debtor ledger and uses its own credit control team to secure payment. With invoice discounting, the business maintains control of its own ledger and chases debts itself.Business loans may be either secured or unsecured. With a secured loan, the borrower pledges an asset (such as plant, equipment, stock or vehicles) against the debt. If the debt is not repaid, the lender may claim the secured asset. Unsecured loans do not have collateral, though the lender will have a general claim on the borrower’s assets if repayment is not made. Should the borrower become bankrupt, unsecured creditors will usually realise a smaller proportion of their claims than secured creditors. As a consequence, secured loans will generally attract a lower rate of interest.