Bank Loan” is a common form of Debt Financing where a company raises money by borrowing money from a bank with a promise to pay back the Principal and related Interest.

A Bank Loan can be secured or unsecured. A secured Bank Loan requires the company to attach Collateral such as the company’s Assets, which the bank may seize if the company does not pay back the Bank Loan as required by the agreed upon terms. An unsecured Bank Loan does not require Collateral. Often, especially for an Early-Stage Company, a bank will require a Personal Guaranty or your house as additional Collateral to help secure the repayment of the Bank Loan.

A Bank Loan is typically not a common source of funding for Startups due to their inherent lending risk and a typical small base of available Assets to serve as Collateral.