A Beginner's Guide to Loans

A Beginner's Guide to Loans

If you're like most small business owners, you're always looking for ways to grow your business. Even if you're not in need of a loan right now, it's important to be familiar with the different types of loans available so that you'll know what's available when you do need one.

In this beginner's guide to loans, we'll discuss the different types of loans available and how to go about obtaining them. So whether you're just starting out or you're ready to take your business to the next level, keep reading for helpful tips on getting a loan.

What Is a Loan?

A loan is a lump sum of money you borrow from a financial organization that you pay back (with interest) over a set period of time. There are many different types of loan, but they broadly all fall into two categories: secured and unsecured.

With a secured loan you provide an asset as security for the loan that the lender can sell to get their money back if you can’t pay it off. The most common type of secured loan is a bridging loan, where your home is used as security. An unsecured loan is not secured against any asset, so if you can’t repay the lender has no way to get their money back other than taking legal action. Unsecured loans are also sometimes called personal loans.

How Do Loans Work?

Applying for a loan doesn't have to be a complicated or time-consuming process. Whether you're looking for a personal loan, a business Bridging loan, or any other type of loan, there are a few different ways to go about it. You can apply directly to a lender, through a broker, or online. The best option for you will depend on your specific circumstances.

If you go directly to a lender, such as your local bank branch, you'll likely have to fill out a paper application and provide supporting documentation. This can be a bit of a hassle, but it's usually the quickest way to get approved for a loan. Applying through a broker is generally more convenient, as they can do most of the legwork

What Can You Use a Loan for?

Loans are a great way to finance big purchases that you may not be able to pay for all at once. There are loans designed for specific purposes, like mortgages and car loans, as well as more general purpose loans that can be used for anything. Some loans even offer tax benefits, like the home mortgage interest deduction.

Whether you're looking to buy a new car or just need some extra cash, there's a loan out there that can fit your needs. Just be sure to shop around and compare bridging loan rates before taking out any loan, as the interest rate can make a big difference in the total cost of the loan.