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• Loan in simplest terms can be explained as a thing that

is borrowed, especially a sum of money that is expected
to be paid back with Interest.

• The act of giving money, property or other material

goods to a another party in exchange for future
repayment of the principal amount along with interest
or other finance charges is called loan.

• A loan may be for a specific, one-time amount or can be

available as open-ended credit up to a specified ceiling
amount.
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• A secured loan is a loan in which the borrower

pledges some asset (e.g. a car or property) as collateral.

• Secured loans are loans that rely on an asset as

collateral for the loan.

• In the event of loan default, the lender can take

possession of the asset and use it to cover the loan.

• Interests rates for secured loans may be lower than those

for unsecured loans.

• The asset may need to be appraised before you can

borrow a secured loan.
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• Unsecured loans don’t have asset for collateral. These

loans may be more difficult to get and have higher interest
rates.

• Unsecured loans rely solely on your credit history and your

income to qualify you for the loan.

• In case of default, the lender has to exhaust collection

options including debt collectors and lawsuit to recover the
loan.
• For example-
 credit card debt
 personal loans
 bank overdrafts
 credit facilities or lines of credit
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• Open-ended loans are loans that you can borrow

over and over.

• Credit cards and lines of credit are the most common

types of open-ended loans.

• With both of these loans, you have a credit limit that

you can purchase against.

• Each time you make a purchase, your available credit

decreases.

• As you make payments, your available increases

allowing you to use the same credit over and over.
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• Closed-ended loans cannot be borrowed once they’ve

been repaid.

• As you make payments on closed-ended loans, the

balance of the loan goes down.

• However, you don’t have any available credit you can

use on closed-ended loans.

• Instead, if you need to borrow more money, you’d have

to apply for another loan.

• Common types of closed-ended loans include mortgage

loans, auto loans, and student loans.
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Consolidated
Pay Day
Loan
Loan
Business
Term
Loan Loan

Education Personal
Loan Loan

Gold
Loan

Vehicle Home
Loan Loan

Property
Loan

Policy
Construction
Loan
Equipment
Loan
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TERM LOANS

• A term loan is simply a loan provided for business purposes that

needs to be paid back within a specified time frame.

• It typically carries a fixed interest rate, monthly or quarterly

repayment schedule - and includes a set maturity date. It is secure
type of loan.

• A secured term loan will usually have a lower interest rate than an
unsecured one.
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Term
Classification

Short Term Medium Term Long Term

(1 year) (1-3 years) (<3years)
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PERSONAL LOAN

• A personal loan is typically issued for a specific amount

and can be used for various purposes at the discretion of
the borrower.

• A personal loan can be a secured loan or an unsecured

loan. A secured loan uses an asset — such as a house or car
— as collateral (or support).

• If the borrower defaults on the loan, the creditor can take

the asset.

• An unsecured loan does not require collateral and is

considered high risk. As such, it has a higher interest rate.
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CONSOLIDATED LOANS

• Debt consolidation is a widely used term that can imply

the use of a number of different debt assistance plans that
combine multiple debts, loans or payments.

• There are three main types of debt relief options available:

 Debt Consolidation Loans,

 Student Loan Consolidation,
 Debt Management Plans and Debt Settlement.
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• Things debt consolidation can do:

Lower your interest rates Lower your monthly payments

Protect your credit rating Help you get out of debt faster
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EDUCATION/STUDENT LOAN

• A loan offered to students which is used to pay

off education-related expenses, such as college tuition,
room and board at the university, or textbooks.

• Many of these loans are offered to students at a lower

interest rate, such as the Perkins loan or Stafford loan.

• In general, students are not required to pay back these

loans until the end of a grace period, which usually begins
after they have completed their education.

• One of the major benefits of these types of loans is that

they come with low interest rates and do not require
collateral or a credit check.
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VEHICLE LOAN
• Most people today need a loan when they buy a new or
used car. And the high cost of many cars means that
consumers spend years paying for their vehicles.

• Because a car loan is such a huge debt for most people, it

pays to understand it before entering into an agreement.

• A car loan is a secured loan, which means the vehicle

serves as collateral on the debt.

• If you fail to make your payments, the lender can seize it

as payment.

• This is much safer for the lender than unsecured debt,

such as a credit card account, where the lender has only
the card-holder’s promise to pay
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GOLD LOAN
• It is a form of debt financing whereby a potential gold
producer borrows gold from a lending institution, sells the
gold on the open market, uses the cash for mine
development, then pays back the gold from actual mine
production.

• Gold loans had less appeal in the 1990s as mining

companies were offered other increasingly sophisticated
financial instruments, such as forwards and options, by the
bullion banks.
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POLICY LOAN
• A loan issued by an insurance company that uses the cash
value of a person's life insurance policy as collateral.

• Traditionally, these were loans issued at a very low interest

rate, but that is no longer universally true.

• If the borrower fails to repay the loan, the money is

withdrawn from the insurance death benefit.

• Sometimes referred to as a "life insurance loan."

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LOAN AGAINST PROPERTY (LAP)

• The individual takes the loan by mortgaging the house

property. It is a Secured loan

• One of the cheapest retail loans after home loans;

usually about 12%-16%.

• Since the rate of interest is lower, frequently LAP

Equated Monthly Installments (EMI) turn out cheaper.

• Maximum loan eligibility is determined primarily by the

value of the property and income.

• The Maximum loan tenure for LAP is up to 15 years (180

months).
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HOME LOAN

• The home loan is a loan advanced to a person to assist in

buying a house or condominium.

• Purchasing a house can be a valuable form of investment.

• However, it requires considerable thought and

careful financial planning before taking on such a big step.

• If owning a house is part of your financial goal, then you’ll

need to know whether you can afford from your income and
savings.
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PAY DAY LOAN

• Payday loans are short-term, high-interest loans

designed to bridge the gap from one paycheck to the
next.

• They are predominantly used by repeat borrowers

living paycheck to paycheck.

• Because of the loans’ high costs, the government

strongly discourages their use.
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CONSTRUCTION EQUIPMENT LOAN

• Construction Equipment loans are provided for purchase

of both new and used equipment like excavators, backhoe
loaders, cranes, higher end construction equipment etc.

• The tenure of such loans vary from 12 to 60 months

depending upon the deal and nature of repayment
capacity.

• This is usually a secured loan where the machine itself is

hypothecated until the loan is repaid.
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BUSINESS LOAN

• Businesses require an adequate amount of capital to fund

startup expenses or pay for expansions.

• As such, companies take out business loans to gain the

financial assistance they need.

• A business loan is debt, that the company is obligated to

repay according to the loan’s terms and conditions.

• According to the U.S. Small Business Administration,

before approaching a lender for a loan, it is imperative for
the business owners to understand how loans work and
what the lender will want to see from the owner.
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The 4 C's of Credit for Loans

Character

4C Capacity
Collateral To
Concept
Repay

Capital
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• Character refers to the financial history of the borrower;

that is, whet kind of "financial citizen" is this person or
business?
• Character is most often determined by looking at the
credit history, particularly as it is stated in the credit
score (FICO score).
• Factors that will affect the credit score include:
 Late payments
 Delinquent accounts
 Available credit
 Total debt

• The fewer the problems, the higher the credit score.

• A high personal credit score (over 700) may be the most
important factor in getting a business loan.
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• Capacity refers to the ability of the business to generate

revenues in order to pay back the loan.

• In other words capacity measures a borrower's ability

to repay a loan by comparing income against
recurring debts.

• Since a new business has no "track record" of profits, it is

riskiest for a bank to consider.
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• Capital refers to the capital assets of the business.

• Capital assets might include machinery and equipment

for a manufacturing company, as well as product
inventory, or store or restaurant fixtures.

• Banks consider capital, but with some hesitation, because

if your business folds, they are left with assets that have
depreciated and they must find someplace to sell these
assets, at liquidation value.

• You can see why, to a bank, cash is the best asset.

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• Collateral is the cash and assets a business owner pledges

to secure a loan.
• In addition to having good credit, a proven ability to make
money, and business assets, banks will often require an
owner to pledge his or her own personal assets as security
for the loan.
• Banks require collateral because they want the business
owner to suffer if the business fails.
• If an owner didn't have to put up any personal assets, he or
she might just walk away from the business failure and let
the bank take what it can from the assets.
• Having collateral at risk makes the business owner more
likely to work to keep the business going, as banks reason
it.
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Letting people know on existing marketing

pieces

• Putting a tagline on the business cards saying, “we do

commercial loans”.

• It is in the form of any ads display or radio or otherwise.

• Most of the competition does not advertise commercial

loans so it helps setting a business apart!
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Starting where you are

• When banks have been in loan business for longtime
they have customers from past.

• Those Customers may have friends or family members

that have some wealth. This is a great place to start.

• People with money tend to be on the lookout for ways to

make more money.

• Banks provide them with the fire to ROI (returns on

investment) that blows away their current stock
portfolio.

• Also, existing Realtors are a great source.

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Attending networking functions

• In commercial lending, more deals get done by networking

then by advertisement.

• Deals are done by word of mouth more than any other form
of real estate.

• So it is absolutely critical to go to Chamber of Commerce

events and any local Commercial Real Estate Banquet.

• With any networking event , the key is to follow up.

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Sponsoring something at a charity function.

• As banks get success in commercial lending they plow some
of their profits back into building their business.

• A great way to get some business is to get involved in

charities.

• The wealthy get involved in charities and the wealthy are

their target market.

• When the charity has a yearly gala (and most do), all the
players are there.

• Banks Contact the charity ahead of time and ask for

sponsorship opportunities.
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