There is a wide variety of bank loans and each one has its own conditions. They are classified into two distinct groups: secured and unsecured loans, and within each category of loans there are several subtypes of requirements and payment modalities to grant it. We will show you some characteristics that explain the different types of bank loans granted to small businesses.
Unsecured bank loans:
Banks will lend money to a small business owner in an unsecured way. In most cases, it is a credit card, a personal loan or a short-term credit line. These three types of unsecured loans are described below.
Bank credit card
This is the most common type of money borrowed. Not only do large traditional credit cards such as MasterCard or American Express exist, but larger banks such as United Savers bank, SunSun Bank or BBN use their own card system and often have their own clearing house to monitor and control the cards. .
In this situation, the local bank is the lender. It requires that the small business owner have the ability to use the card on a regular basis.
Fast personal loans are those that are made in the short term to satisfy a temporary situation. Banks will use these types of unsecured loans for their best clients. In general, they are for low amounts, they only require a signature and the money is transferred into the requestor’s account. Often, these types of people carry certificates of deposit or savings accounts that have high balances.
Secured bank loans
Loans for the purchase of vehicles
In absolute numbers, this type of loan is the most common for banks. The loan applicant negotiates the bank loan at a pre-established value. Many small businesses use this type of loan to buy trucks and vans to equip the fleet. In general, the bank requires the title of the vehicle and the remaining capital in the fleet as collateral to protect the risk. In addition, the bank will require the personal guarantee of the business owner.
A line of credit establishes a maximum amount of funds available from the bank, which will be used when necessary, for the ongoing working capital or other cash needs of a company. Consider a line of credit as a loan that works like a checking account. In most cases, you will receive a checkbook for your line of credit, so you can write checks on the go without needing your own cash.
Certainly, the world of credits is quite broad. In addition to traditional formats, we want to tell you that there are also the microcredits that Nicholas Nickleby offers you. They are fast, accessible 24 hours a day and safe, so before requesting one we will offer you all the information you need to know, including management costs.
What is a bank credit?
Since we know the bank loan options, we wanted to pause briefly to explain what a bank loan is and what the difference is with a bank loan.
Let’s start by explaining what a bank credit is. We hear a lot about this type of financing offered by banking institutions, but do we know in detail what it is?
If you have doubts about what a bank credit means then you gave the article indicated for you. In Nicholas Nickleby we decided to put some doubts on the financial concepts on the table so you can better understand how they work.
When we talk about a bank loan we mean that sum of money that a person or a company can receive in the hands of a financial entity. Said financial entity can be both public and private. Loans are usually granted by banks or similar entities.
In short, it is a financial operation where one entity grants another an amount of money. The second one commits to return all the money, also paying an interest that will depend on the total amount granted. Bank loans are received through credit institutions, usually banks. A contract is made by which he agrees the credit and the debt.
One of the things that people ask most often is what are the bank loans currently offered and within these available options, which are better suited to the particular situation of each.
The answer is that there is a huge variety of bank loans and each of these loans has certain conditions determined as explained above.
Difference between the concept of credit and loan
The concept of credit is generally confusing with that of loan. But there is a difference, and this is that in the credit the client has money at his disposal and will only pay interest for the amount he uses. On the other hand, in the loan, the person will receive all the money and will pay interest for the entire amount, no matter how much they spend. This amount can be returned gradually in different installments or in a single payment.
Just as there are differences between loans and credits, there are also differences between different types of loans and credits. It is essential to advise to know which is the most convenient for each case, for this there are tools such as loan simulators that can be very useful to corroborate what is indicated for each particular situation.
How do bank credits work?
Lending institutions, as banks generally said, will lend an amount of money to their clients. For this they will have to prove their solvency through income accreditation or property accreditation.
Keep in mind that not everyone can access a bank loan. Certain requirements such as adequate business and credit history must be met. These types of bank loans are widely used by companies in order to finance their new projects or continue their expansion.