Borrowing money from a lending institution is a popular way to fund a business’ foundation or growth. This is because lenders do not have ownership or operational control of the business through this form of funding. Loan interest is also tax deductible, which may be attractive for some businesses.
Institutions give traditional finance on the basis of security, usually an asset, and/or a sound business plan. Owners must meet that lending criteria to obtain the money. Following that process, the business owner’s obligations are to repay the loan in fixed installments over a set time.