A Brief Note On Bank Loans And Interest Rate Advantage Essay

1002 Words Sep 22nd, 2016 5 Pages
Bank loans
1. Advantages
Firstly is tax and interest rate advantage. Normally, the interest of loans from banks does not need to pay tax. At the same time, the interest rate usually remains constant through the process of loans, which means the payments during this period are the same. It is more convenient for enterprises to generate a budget plan and estimate the period payments. Sometimes the interest rate is adjustable during the loan, however, shareholders can use software to calculate future payments based on the change of rate. (John DeMerceau)

Secondly, the bank is separate from ownership. Different from stock, banks have no rights to manage your company. After providing a loan, banks will not be included in operating and regulating the company or other related aspects. The only thing needs to be concerned is making payments on time. As long as you paid off the loan, there is no relationship between you and the bank. (John DeMerceau)

Next, banks are more accessible and flexible compared to other methods of borrowing money. The bank has the abundant capital and high stability. The most important thing is, no matter the amount of loan and how long you want to borrow, banks always offer lots of solutions to fit your special need. (Valentine Belonwu, 2013)

2. Disadvantages
First of all, the requirements of qualification and documentations are massive. Before the banks lend you money, they will ask every detail of your enterprise. They prefer the businesses that have…

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