A loan is money a company borrows with a promise to repay it over time, usually with interest and under agreed terms.
For example, a plumbing company takes a $60,000 loan to purchase a new service van, agreeing to repay it over 4 years at a fixed rate of 8.5%, resulting in monthly payments of $1,487. The van serves as security, and title transfers to the company once the final payment is made.
Why it matters: It leverages future earnings to fund immediate growth, accelerating expansion timelines that would take years to fund organically.
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