Bank Loan, Bank Overdraft, and Trade Credit
Bank Loan
Bank-An establishment authorized by a government to accept deposits, pay interest, clear checks, make loans, act as an intermediary in financial transactions, and provide other financial services to its customer: http://www.businessdictionary.com/definition/bank.html#ixzz2qTHMUNiX
Loan- An arrangement in which a lender gives money or property to a borrower, and the borrower agrees to return the property or repay the money, usually along with interest, at some future point(s) in time. Usually, there is a predetermined time for repaying a loan, and generally the lender has to bear the risk that the borrower may not repay a loan (though modern capital markets have developed many ways of managing this risk). .investorwords.com
-A bank loan is a medium or long term source of finance and will often be for much larger sums of money. A loan is useful for a business that is starting up or looking to grow. Loans are often used to buy fixed assets (see balance sheets) such as machinery and vehicles. A business will pay the bank back each month in instalments and will also pay an interest charge. (teachersnetwork.org)
-A bank loan is a fixed amount for a fixed term with regular fixed repayments. The interest on a loan tends to be lower than an overdraft.
A fixed term means how many months or years before the loan has to be repaid in full.Normally a fixed term loan will be for a greater amount than an overdraft.
Interest - Banks are providing a service by lending money in the form of overdrafts and loans and banks will charge for this service (they want to make a profit too). When a business takes a loan, it will agree to pay it back over a period of years but it will also pay an extra charge. This charge, called interest, is a percentage of the value of the loan.
- Interest on the loan is recorded as an expense on the Profit and Loss Account. Any capital repayments will reduce the long-term liability on the balance sheet. Short term borrowing to help fund a
Bank-An establishment authorized by a government to accept deposits, pay interest, clear checks, make loans, act as an intermediary in financial transactions, and provide other financial services to its customer: http://www.businessdictionary.com/definition/bank.html#ixzz2qTHMUNiX
Loan- An arrangement in which a lender gives money or property to a borrower, and the borrower agrees to return the property or repay the money, usually along with interest, at some future point(s) in time. Usually, there is a predetermined time for repaying a loan, and generally the lender has to bear the risk that the borrower may not repay a loan (though modern capital markets have developed many ways of managing this risk). .investorwords.com
-A bank loan is a medium or long term source of finance and will often be for much larger sums of money. A loan is useful for a business that is starting up or looking to grow. Loans are often used to buy fixed assets (see balance sheets) such as machinery and vehicles. A business will pay the bank back each month in instalments and will also pay an interest charge. (teachersnetwork.org)
-A bank loan is a fixed amount for a fixed term with regular fixed repayments. The interest on a loan tends to be lower than an overdraft.
A fixed term means how many months or years before the loan has to be repaid in full.Normally a fixed term loan will be for a greater amount than an overdraft.
Interest - Banks are providing a service by lending money in the form of overdrafts and loans and banks will charge for this service (they want to make a profit too). When a business takes a loan, it will agree to pay it back over a period of years but it will also pay an extra charge. This charge, called interest, is a percentage of the value of the loan.
- Interest on the loan is recorded as an expense on the Profit and Loss Account. Any capital repayments will reduce the long-term liability on the balance sheet. Short term borrowing to help fund a