Understanding Bank Loans for Businesses

What determines the amount a business can borrow and the repayment period for a bank loan?

• A number of factors including business checks and owner evaluations

• The bank's current interest rates

• The business's annual revenue

• The business's location

How can a fixed interest rate benefit a business taking out a loan?

• It automatically adjusts to inflation

• It provides a predictable repayment schedule

• It offers a lower initial interest rate

• It allows the business to pay less interest if market rates drop

What is a key advantage of a bank loan for a business?

• It can be repaid at any time without penalties

• It has no interest charges

• It offers a guaranteed source of finance with predictable costs

• It requires no collateral

What is a potential risk for a business if it fails to repay a bank loan?

• The business will face criminal charges

• The business will have to pay double the interest

• The business will not be able to apply for future loans

• The business may lose its assets to the bank

Why might small businesses find it challenging to secure a bank loan?

• They have too many assets

• They are considered a greater risk due to limited history and smaller cash flows

• They are required to have a fixed interest rate

• They have too much cash flow