Bank loans are available at interests that are affordable but the term for which they are given is so long that most salaried people do not want to commit to it. When a sudden expense pops out of nowhere, the most immediate thought is to run to a nearby bank and stand in the queue for a bank loan.
Bank loans are among the most difficult to obtain loans. Banks are picky about lending money. Bank loans are classified as special mention assets when the lender fails to supervise a loan properly or maintain sufficient documentation, or otherwise has deviated from acceptable and prudent lending practices. Assets listed for special mention generally reflect weaknesses in administration, servicing, or collection, as opposed to credit weaknesses, which are noted in examination reports as Adversely Classified Assets.
Loans which are from banks are the predominant source of external funding in many countries. But capital markets and equity markets are not a significant source of financing, even in developed countries with well-established and functioning capital and equity markets.
Bank loans are extremely difficult to obtain and they are usually only given to businesses with outstanding credit and a proven track record. If local banks have determined you don’t meet the five C’s criteria or if they can’t provide enough financing, there are probably non-bank sources in a few directory’s who can. Bank loans are very flexible. They can vary in the length of time that the loan has to be repaid. Bank loans are not an option for everyone.
Loans which are from banks are a little bit different as they have a different set of requirements altogether. Especially with the lending industry being a little bit tighter with their lending practices, you may have a difficult time getting the loan to go through. Loans which are from banks are not spontaneous financing as is trade credit. Borrowers must apply for loans, and lenders must grant them.
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