In a nutshell, finance from bank is the process of channeling money from investors and savers into different types of financial instruments. These instruments help savers to earn interest and dividends. Similarly, businesses also use finance from bank to finance operations. In both cases, the banks take a small fee from the borrowers for giving them the money.
The most traditional type of finance from bank is a bank loan. This loan is usually for a fixed period of time. The repayment schedule can be either interest-only or capital repayment. It can also be secured by collateral. However, banks are very picky about which businesses they lend money to. For this reason, they are more likely to approve a loan for a successful business with solid past performance and high-growth prospects.
Aside from banking, finance also includes mortgage brokers and investment banks. A mortgage broker is a professional who helps people find house loans. A commercial bank is a financial institution that takes deposits from its customers and lends the money out to earn a higher return. An investment bank is one that helps companies raise funds for capital. Another type of financial institution is an insurance company that collects premiums from customers and lends them out to fund various activities.
