What are the general benefits of funding

Loan financing


The Loan financing is together with equity financing to the External financing assign. With loan financing, the company is provided with outside capital without the lender becoming a shareholder.

In the case of external financing through loans, the lender only has the right to interest and repayment for the amount of money provided, and in the event of insolvency also the right to part of the bankruptcy estate.

The creditor (= Lender) has neither the right to co-determination within the company, nor does he have to be responsible for the actions of the Debtor (= Borrower) are liable in any way.

It should be noted that the loan is actually getting limited is. This means that the capital is only left to the debtor for a certain period (e.g. credit period 5 years).

Advantages and disadvantages of loan financing


Advantages:

  • Lenders generally have no say, decision-making and control powers (exception: if there is a high degree of dependency on the lender)
  • Elasticity of total capital (flexibility of the company is increased)


Disadvantage:

  • Right to interest and repayment.


The explanation of the various Loan types is located on this page: Credit Types

Looking for credit? Simply use our comparison calculator


If you are looking for a loan, you can easily use our loan comparison calculator. Simply enter the desired loan amount and the term - the cheapest loan will be determined.


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The article "Loan Financing" is in the category: Financing types