A bank loan is a monetary loan received from a commercial lender. A bank loan must have a predetermined duration and an interest rate that is fixed or adjustable. Generating loans and charging interest is the very purpose of a modern bank.

The function of a bank loan is to provide the bank customer with the necessary funds to accomplish the purpose of the loan, and to provide the bank interest income however, the majority of bank loans will be for a set duration at a fixed rate of interest.

To get a bank loan at Sumac Microfinance Bank, one starts by filling out a loan application form. This includes personal information, financial information and questions about the purpose of the loan. The application goes through underwriting, where the bank will make a decision on whether or not to loan the money and at what rate of interest. The bank investigates the customer’s credit rating and if it is acceptable, the bank issues the loan with an interest rate corresponding to the customer’s credit score.