Title: Compare the types of loans available to businesses.
Course: Principles of Business and Marketing (12051-36) > Section: Making Sound Business Decisions

Comparison should include the following types of credit and the advantages and disadvantages of each:

- Line-of-credit loans
- Installment loans (e.g., mortgage loans, car loans, student loans)
- Balloon loans
- Interim loans
- Secured and unsecured loans
- Letter of credit
- Term loans, both short- and long-term, according to the number of years for which they are written
- Second mortgages, in which real estate is used to secure a loan; usually long-term, also known as equity loans
- Inventory loans and equipment loans for the purchase of, and secured by, either equipment or inventory
- Accounts receivable loans secured by outstanding accounts
- Personal loans, in which the signature and personal collateral guarantee the loan, which in turn lends to the business
- Guaranteed loans, in which a third party—an investor, spouse, or the Small Business Administration (SBA)—guarantees repayment
- Commercial loans, in which the bank offers its standard loan for small businesses

Process/Skill Questions:

- What are the benefits of a balloon loan? What are the drawbacks?
- What are the advantages and disadvantages of each of type of loan?
- What is an example of a situation in which a particular loan would be the best choice?