Importance of Loans


Over the years, loans have taken the first place as a source of finances for individuals, businesses and also corporate. A loan is a form of funding where the lender who has surplus lends money to the borrower who has a deficit to be paid with an interest rate over a given period of time. Loans can either be secured or unsecured. Secured loans are loans taken against collateral while unsecured lack collateral. Loans are broadly classified ranging from car loans, home and mortgage loans, personal loans, business loans and student loans.

Cigno Loans have proved of so much help to both the lenders and the borrower in so many ways. First, the borrower is able to get access to money that he did not have. For instance in a car loan, the borrower will be able to get a lump sum of money to purchase a car. In case of a financial crisis a loan come in handy as one may need cash in hand to be used immediately in such emergency situations. In such cases one is able to get money from loans that can be approved without so much hassle. An example such a loan is a payday loan which can be approved within 24hours. A payday loans is secured by the postdated check of the borrower.

Secondly, the borrower is given ample time to repay the loan. The lending institution usually gives time either in years or months to pay loans. This enables the borrower to plan his payments. In so many cases you find the borrower who takes a loan to start an enterprise will be able to repay the loan through the profits made by the enterprise.

The lender on the other hand is able to dispose their surplus money at an interest rate. The individual lender or financial institution gets profits from interest paid by the borrowers. This can also be illustrated where the government lends to the small and medium enterprises. The small and medium enterprises provide about 50% of the employment thus reducing the unemployment levels in the government. Also the SMEs provide 50% or more Gross Domestic Product of the government.

Loans financing plays an important role in expanding a business operations. These can be made possible through opening of new branches in different cities and also countries. The entrepreneur is encouraged to bring new products and also take more risks. The stress free availability of loans can help an enterprise adopt a new line of business thus bringing more revenue so click here. Also, a loan bring is tax advantage to the business. Taxes are not tax deductible thus reducing the tax liability for the business.

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