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LOAN
S
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• Loan in simplest terms can be explained as a

thing that is borrowed, especially a sum of
money that is expected to be paid back with
Interest.

• The act of giving money, property or other

material goods to a another party in exchange
for future repayment of the principal amount
along with interest or other finance charges is
called loan.

• A loan may be for a specific, one-time amount or

can be available as open-ended credit up to a
specified ceiling amount.
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CLASSIFICATION
OF
LOANS

SECURED UNSECURE OPEN- CLOSED-

D ENDED ENDED
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SECURED LOANS
• A secured loan is a loan in which the borrower
pledges some asset (e.g. a car or property)
as collateral.

• Secured loans are loans that rely on an asset as

collateral for the loan.

• In the event of loan default, the lender can take

possession of the asset and use it to cover the
loan.

• Interests rates for secured loans may be lower

than those for unsecured loans.

• The asset may need to be appraised before you

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UNSECURED LOANS
• Unsecured loans don’t have asset for collateral.
These loans may be more difficult to get and have
higher interest rates.

• Unsecured loans rely solely on your credit history

and your income to qualify you for the loan.

• In case of default, the lender has to exhaust

collection options including debt collectors and
lawsuit to recover the loan.
• For example-
 credit card debt
 personal loans
 bank overdrafts
 credit facilities or lines of credit
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OPEN-ENDED LOANS
• Open-ended loans are loans that you can
borrow over and over.

• Credit cards and lines of credit are the most

common types of open-ended loans.

• With both of these loans, you have a credit limit

that you can purchase against.

• Each time you make a purchase, your available

credit decreases.

• As you make payments, your available increases

allowing you to use the same credit over and
over.
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CLOSED-ENDED LOANS
• Closed-ended loans cannot be borrowed once
they’ve been repaid.

• As you make payments on closed-ended loans,

the balance of the loan goes down.

• However, you don’t have any available credit

you can use on closed-ended loans.

• Instead, if you need to borrow more money,

you’d have to apply for another loan.

• Common types of closed-ended loans include

mortgage loans, auto loans, and student loans.
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Consolidated
Pay Day
Loan
Loan
Business
Term
Loan Loan

Educatio Personal
n Loan Loan

TYPES
Gold
OF
Loan LOANS

Vehicle Home
Loan Loan

Property
Loan

Policy Constructio
Loan n
Equipment
Loan
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TERM LOANS

• A term loan is simply a loan provided for business purposes that

needs to be paid back within a specified time frame.

• It typically carries a fixed interest rate, monthly or quarterly

repayment schedule - and includes a set maturity date. It is secure
type of loan.

• A secured term loan will usually have a lower interest rate than an
unsecured one.
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Term
Classification

Medium
Short Term Long Term
Term
(1 year) (<3years)
(1-3 years)
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PERSONAL LOAN
• A personal loan is typically issued for a specific
amount and can be used for various purposes at
the discretion of the borrower.

• A personal loan can be a secured loan or an

unsecured loan. A secured loan uses an asset —
such as a house or car — as collateral (or support).

• Use for personal expenses such as medical bills or

home renovation

• If the borrower defaults on the loan, the creditor

can take the asset.

• An unsecured loan does not require collateral and

is considered high risk. As such, it has a higher
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CONSOLIDATED LOANS

• Debt consolidation is a widely used term that can

imply the use of a number of different debt
assistance plans that combine multiple debts,
loans or payments.

• There are three main types of debt relief options

available:

 Debt Consolidation Loans,

 Student Loan Consolidation,
 Debt Management Plans and Debt Settlement.
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• Things debt consolidation can do:

Lower your interest rates Lower your monthly payments

Protect your credit rating Help you get out of debt faster
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EDUCATION/STUDENT LOAN

• A loan offered to students which is used to pay

off education-related expenses, such as college
tuition, room and board at the university, or
textbooks.

• Many of these loans are offered to students at

a lower interest rate, such as the Perkins
loan or Stafford loan.

• In general, students are not required to pay

back these loans until the end of a grace period,
which usually begins after they have completed
their education.

• One of the major benefits of these types of loans is

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VEHICLE LOAN
• Most people today need a loan when they buy a
new or used car. And the high cost of many cars
means that consumers spend years paying for
their vehicles.

• Because a car loan is such a huge debt for most

people, it pays to understand it before entering
into an agreement.

• A car loan is a secured loan, which means the

vehicle serves as collateral on the debt.

• If you fail to make your payments, the lender can

seize it as payment.

• This is much safer for the lender than unsecured

debt, such as a credit card account, where the
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GOLD LOAN
• It is a form of debt financing whereby a potential
gold producer borrows gold from a lending
institution, sells the gold on the open market, uses
the cash for mine development, then pays back the
gold from actual mine production.

• Gold loans had less appeal in the 1990s as mining

companies were offered other increasingly
sophisticated financial instruments, such as
forwards and options, by the bullion banks.
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POLICY LOAN
• A loan issued by an insurance company that uses
the cash value of a person's life insurance policy as
collateral.

• Traditionally, these were loans issued at a very low

interest rate, but that is no longer universally true.

• If the borrower fails to repay the loan, the money

is withdrawn from the insurance death benefit.

• Sometimes referred to as a "life insurance loan."

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LOAN AGAINST PROPERTY (LAP)

• The individual takes the loan by mortgaging the

house property. It is a Secured loan

• One of the cheapest retail loans after home

loans; usually about 12%-16%.

• Since the rate of interest is lower, frequently

LAP Equated Monthly Installments (EMI) turn
out cheaper.

• Maximum loan eligibility is determined primarily

by the value of the property and income.

• The Maximum loan tenure for LAP is up to 15

years (180 months).
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HOME LOAN
• The home loan is a loan advanced to a person to
assist in buying a house or condominium.

• Purchasing a house can be a valuable form

of investment.

• However, it requires considerable thought and

careful financial planning before taking on such a
big step.

• If owning a house is part of your financial goal,

then you’ll need to know whether you can afford
from your income and savings.
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PAY DAY LOAN

• Payday loans are short-term, high-interest loans

designed to bridge the gap from one paycheck
to the next.

• They are predominantly used by repeat

borrowers living paycheck to paycheck.

• Because of the loans’ high costs, the

government strongly discourages their use.
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CONSTRUCTION EQUIPMENT LOAN

• Construction Equipment loans are provided for

purchase of both new and used equipment like
excavators, backhoe loaders, cranes, higher end
construction equipment etc.

• The tenure of such loans vary from 12 to 60

months depending upon the deal and nature of
repayment capacity.

• This is usually a secured loan where the machine

itself is hypothecated until the loan is repaid.
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BUSINESS LOAN

• Businesses require an adequate amount of capital

to fund startup expenses or pay for expansions.

• As such, companies take out business loans to

gain the financial assistance they need.

• A business loan is debt, that the company is

obligated to repay according to the loan’s terms
and conditions.

• According to the U.S. Small Business

Administration, before approaching a lender for a
loan, it is imperative for the business owners to
understand how loans work and what the lender
will want to see from the owner.
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Strategies For Marketing

Of Loans
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The 4 C's of Credit for Loans

Character

4C Capacity
Collateral To
Concept
Repay

Capital
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CHARACTER
• Character refers to the financial history of the
borrower; that is, whet kind of "financial citizen"
is this person or business?
• Character is most often determined by looking at
the credit history, particularly as it is stated in the
credit score (FICO score).
• Factors that will affect the credit score include:
 Late payments
 Delinquent accounts
 Available credit
 Total debt

• The fewer the problems, the higher the credit

score.
• A high personal credit score (over 700) may be
the most important factor in getting a business
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CAPACITY

• Capacity refers to the ability of the business to

generate revenues in order to pay back the loan.

• In other words capacity measures a borrower's

ability to repay a loan by comparing income
against recurring debts.

• Since a new business has no "track record" of

profits, it is riskiest for a bank to consider.
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CAPITAL

• Capital refers to the capital assets of the

business.

• Capital assets might include machinery and

equipment for a manufacturing company, as well
as product inventory, or store or restaurant
fixtures.

• Banks consider capital, but with some hesitation,

because if your business folds, they are left with
assets that have depreciated and they must find
someplace to sell these assets, at liquidation
value.

• You can see why, to a bank, cash is the best asset.

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COLLATERAL
• Collateral is the cash and assets a business owner
pledges to secure a loan.
• In addition to having good credit, a proven ability
to make money, and business assets, banks will
often require an owner to pledge his or her own
personal assets as security for the loan.
• Banks require collateral because they want the
business owner to suffer if the business fails.
• If an owner didn't have to put up any personal
assets, he or she might just walk away from the
business failure and let the bank take what it can
from the assets.
• Having collateral at risk makes the business owner
more likely to work to keep the business going, as
banks reason it.
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Letting people know on existing

marketing pieces

• Putting a tagline on the business cards saying, “we

do commercial loans”.

• It is in the form of any ads display or radio or

otherwise.

• Most of the competition does not advertise

commercial loans so it helps setting a business
apart!
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Starting where you are

• When banks have been in loan business for
longtime they have customers from past.

• Those Customers may have friends or family

members that have some wealth. This is a great
place to start.

• People with money tend to be on the lookout for

ways to make more money.

• Banks provide them with the fire to ROI (returns

on investment) that blows away their current
stock portfolio.

• Also, existing Realtors are a great source.

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Attending networking functions

• In commercial lending, more deals get done by

networking then by advertisement.

• Deals are done by word of mouth more than any

other form of real estate.

• With any networking event , the key is to follow up.

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Sponsoring something at a charity

function.
•As banks get success in commercial lending they
plow some of their profits back into building their
business.

• A great way to get some business is to get involved

in charities.

• The wealthy get involved in charities and the

wealthy are their target market.

• When the charity has a yearly gala (and most do), all
the players are there.

• Banks Contact the charity ahead of time and ask for

sponsorship opportunities.
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Thank You…