bank loan

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Bank Loan

The extension of money from a bank to another party with the agreement that the money will be repaid. Nearly all bank loans are made at interest, meaning borrowers pay a certain percentage of the principal amount to the lender as compensation for borrowing. Most loans also have a maturity date, by which time the borrower must have repaid the loan. A bank loan occasionally is called a bank advance. See also: Loan.

bank loan

or

bank advance

the advance of a specified sum of money to an individual or business (the borrower) by a COMMERCIAL BANK, SAVINGS BANK. etc. (the lender). A bank loan is a form of CREDIT which is extended for a specified period of time, usually on fixed-interest terms related to the base rate of interest, with the principal being repaid either on a regular instalment basis or in full on the appointed redemption date. Depending upon the nature of the loan and the degree of risk involved, a bank loan may be unsecured or secured, the latter requiring the borrower to deposit with the bank an approved form of COLLATERAL SECURITY (for example the property deeds to his house). In the case of businesses, bank loans are usually renegotiated shortly before expiring, thus providing the borrower with a ‘revolving’ line of credit used mainly to finance WORKING CAPITAL requirements. See OVERDRAFT, INTEREST RATE.

bank loan

the advance of a specified sum of money to an individual or business (the borrower) by a COMMERCIAL BANK, SAVINGS BANK, etc. (the lender). A bank loan is a form of CREDIT that is often extended for a specified period of time, usually on fixed-interest terms related to the base INTEREST RATE, with the principal being repaid either on a regular instalment basis or in full on the appointed redemption date. Alternatively, a bank loan may take the form of overdraft facilities under which customers can borrow as much money as they require up to a pre-arranged total limit and are charged interest on outstanding balances. In the case of business borrowers, bank loans are used to finance WORKING CAPITAL requirements and are often renegotiated shortly before expiring to provide the borrower with a ‘revolving’ line of credit.

Depending on the nature of the loan and the degree of risk involved, bank loans may be unsecured or secured, the latter requiring the borrower to deposit with the bank COLLATERAL SECURITY (e.g. title deeds to a house) to cover against default on the loan.

References in periodicals archive ?
The analysis made by study report reflects a trend of concentration of bank advances to primarily three provinces or regions of the country i.
55 percent in bank advances to private sector in 2001 which gradually declined to 1.
Hence, looking from 'supply side', the determinants of the demand for money consist of the determinants of the demand for government debt, currency demand, and the demand for bank advances to the private business sector and the personal sector.
The business sector considers that bank advances are a close substitute for money transactions balances.
Also, continuation of priority sector status for bank advances to NBFCs for onward lending to farmers is critical for their business growth.
This growth in assets was primarily funded by a $54 million increase in deposits to $293 million and, a $16 million increase in Federal Home Loan Bank advances.
0 million of Federal Home Loan Bank Advances with a weighted average yield of 5.
The Corporation prepaid approximately $81 million in longer-term, fixed rate Federal Home Loan Bank advances that carried a weighted average rate of 6.
The bank's primary purpose is to gain banking powers to access low cost funding such as servicing escrow and customer deposits as well as Federal Home Loan Bank advances, and these comprise the bulk of the bank's liabilities.
3 million at March 31, 2003 due primarily to an increase of $336,000 in deposits offset by a decrease of $90,000 in Federal Home Loan Bank advances.