What is loan finance?

What is a loan?

• A loan is a financial transaction in which one party (the lender) agrees to give another party (the borrower) a sum of money with the expectation of total repayment.
• A lender can ask for interest payments in addition to the original loan amount. The terms and conditions of a loan transaction are commonly detailed in the form of a contract.
• A contract will usually state repayment terms, including any arrangement fees, the amount owed, agreed interests rates and repayment due dates.
• Loans are simply another way of financing an organisation and should not be considered as a replacement for grants.
• Loans are not an income stream but a financial enabling tool.