Loan

What is a Loan?

A loan is a sum of money borrowed from a lender, typically a bank or financial institution, that must be repaid with interest over a set period. Loans are used for various purposes, such as funding business operations, purchasing assets, or covering expenses. The terms of a loan, including the interest rate, repayment schedule, and collateral requirements, are agreed upon between the borrower and the lender.

Types of Loans

• Secured Loan: Requires collateral to back the loan.
• Unsecured Loan: Does not require collateral but may have higher interest rates.
• Short-Term Loan: Must be repaid within a year or less.

Related Terms and Concepts

Interest rate, collateral, creditworthiness, debt financing.