A Bank Loan is one of the most common forms of loan capital for a business. Bank can provide medium or long-term finance, a term of loan depends on the suitability of individual loan. The bank fixes a time period over which bank gives a loan as for 3, 5 or 10 years, a rate of interest, timing and amount of repayments. For the procedure of bank loan, bank demands some security or collateral, however, security condition changes in the case of a start-up, in the matters of start up security comes in the form of personal guarantees by an entrepreneur.
Businessperson considers bank loan is beneficial for financing investment in fixed assets as plant, machinery, land, and buildings. Banks generally charge a lower rate of interest for a bank loan in the comparison of a bank overdraft.
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