bank loan
orbank advance
the advance of a specified sum of money to an individual or business (theborrower) by a COMMERCIAL BANK, SAVINGS BANK. etc. (the lender). A bank loan is a form of CREDIT which isextended for a specified period of time, usually on fixed-interest terms related to the base rate of interest, with the principalbeing repaid either on a regular instalment basis or in full on the appointed redemption date. Depending upon the nature ofthe loan and the degree of risk involved, a bank loan may be unsecured or secured, the latter requiring the borrower todeposit with the bank an approved form of COLLATERAL SECURITY (for example the property deeds to his house). In thecase 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.
Collins Dictionary of Business, 3rd ed. © 2002, 2005 C Pass, B Lowes, A Pendleton, L Chadwick, D O’Reilly and M Afferson
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 oftime, usually on fixed-interest terms related to the base INTEREST RATE, with the principal being repaid either on a regularinstalment basis or in full on the appointed redemption date. Alternatively, a bank loan may take the form of overdraftfacilities under which customers can borrow as much money as they require up to a pre-arranged total limit and are chargedinterest on outstanding balances. In the case of business borrowers, bank loans are used to finance WORKING CAPITALrequirements 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 latterrequiring the borrower to deposit with the bank COLLATERAL SECURITY (e.g. title deeds to a house) to cover againstdefault on the loan.
