Banks and other financial institutions are types of organizations that provide coverage and help on the financial expenses of a business or an individual. These establishments could also be called a Licensed Money Lender because they offer to lend people who are undergoing financial problems. In other words, they focus primarily on the aspects of lending; as an example, Lender Singapore refers to some of the most reliable financial institutions established in Singapore. Moreover, these banking companies are differentiated according to their three types: contractual institutions, depository institutions, and investment institutions.
Some of the examples of the contractual institutions include pension funds and insurance companies. While for the depository institutions, these include building societies, credit unions, mortgage loan companies, trust companies, and banks. And at last, for the investment institutions, these have underwriters, investment banks, and brokerage firms are the examples.
Also, these financial institutions have their variation of services and plans. Yet, in general, they all come up into similar functions which are compiled below.
For the personal loans
Personal loans are a type of loan that is commonly given to individuals who borrow money for their personal purposes and motives. This is known to be the most usual loan offered by financial companies because any individual who is in a stable financial situation can avail of the said plan.
This is also subdivided into various categories including the line of credit loans, secured loans, unsecured loans, student loans, credit builder loans, debt consolidation loans, vacation loans, and wedding loans. Yet, among these categories, the most prominent types offered by financial companies are secured loans and unsecured loans.
For an overview, secured loans are loans that are secured because of the existence of the collateral the clients have agreed to present as an alternative. These entities usually belong to the personal properties of the client and are commonly taken by the company if he or she has caused a default to the agreed regulation. Meanwhile, unsecured loans are the opposite of secured loans because these types don’t require any back-ups or collaterals. Unfortunately, this causes a higher additional percentage of interest rate because the lending company doesn’t have any assurance or security on whether the client would be able to fulfill his or her obligations.
For the business loans
Business loans are types of loans that are usually applied by individuals who own businesses for the sole purpose of financing their business-related expenses. Similarly to other loans, this includes additional interest rates during repayment which vary depending on the amount borrowed and the value of the business.
There are also various types of business loans including bank loans, cash flow loans, mezzanine financing, business cash advances, asset-based financing, microloans, and invoice financing.
For the rundown, cash flow loan deals with transactions that are unsecured and are commonly used during the daily operations of the businesses. Business cash advances let the borrower have money if his or her business agrees to add a certain percentage coming from the sales of credit cards during repayments. Invoice financing is a type where the money is used for improving the business’s cash flows, paying for their suppliers and workers, and improving their operation’s reinvestments. And lastly, asset-based financing offers to provide working capital and term loans to the business which is tenable by machinery, accounts receivable, equipment, inventory, and real estate.
To finance the capital
A special type of funding offered by lending and financial companies, financing the capital for the daily and long term needs is commonly the main reason why businesses choose to apply for loans. These commercial institutions use the borrowed money, consisting of equity and debt, in operating their capital with expected earnings from the interest of their investments, dividends, and stock appreciations. These borrowers also raise funds through administering activities associated with the funding of capital like increasing the capital by stock issuance or debt to acquire new pieces of machinery, lands, building, and other assets that are fixed.
In special considerations, debt capital financing can be added up through the application of loans. This licensed money will be recorded as a liability in long terms and will only descend into the loan if it is paid off gradually.
Conclusion
As seen in today’s generation, money can buy anything. Through the use of money, people can buy their necessities, pay for their education, and cover their medical expenses. However, not all individual is lucky enough to be in a stable financial situation and are capable to buy high-quality entities and services. With the help of financial institutions, these individuals can find immediate solutions to these problems. This Licensed Money Lender has lent people certain amounts of money to cover unforeseen expenses with only having a minimal interest rate as an addition; for example, Lender Singapore is known as one of the most reliable money lenders in Asia and is reliable for their convenient and easy financial services.
