loan

Form of borrowing by individuals, businesses, and governments. Individuals and companies usually obtain loans from banks. The loan with interest is typically paid back in fixed monthly instalments over a period of between one and five years in the UK, although longer-term loans and different repayment conditions may be arranged. Specific forms of loan include mortgages (transfers of property as security for loans), and debentures (loans raised by a company, paying a fixed rate of interest, and secured on the assets of the company). In business, loans are the second most important way (after retained profit) in which firms finance their expansion.