Bank Loans

A bank loan is the extension of funds from a financial institution to a borrower, with the agreement that the amount will be repaid. Most bank loans accrue interest, meaning the borrower pays a percentage of the principal as compensation to the lender. Loans typically have a maturity date, by which the full balance must be repaid.  If the loan is used to purchase tangible assets such as real estate or vehicles, it is likely secured by the property or equipment. Refinancing loans are almost always secured, while business credit extensions, such as commercial lines of credit, are typically backed by a security interest in “all business assets.” To determine whether a loan is secured, reviewing the original loan documents is the most reliable approach.