The Mechanics of a Business Loan
	In all of our other articles, we have primarily focused on the mechanics of how a business line of credit operates. In this article, we will focus on the general mechanics of how a business loan works. Unlike a business LOC, a business loan is provided to an individual or a business as one lump sum. A predefined term is set as is the interest rate (unless the terms of the loan call for an interest rate that is tied to a moving index such as LIBOR or US Treasury Bonds). Each month, you will be required to pay the same amount back to your lender. What is most uncommonly known about business loans is how they are amortized. Much like a mortgage, you first start paying interest on the loan before you start to pay back the original principal. In most cases, the interest that you pay on your business loan is deductible as an expense on your profit and loss statement. The reason why you pay interest first on the business loan is that the aggregate interest rate is tied to the underlying principal that is still owed. For instance, if you take out a 10 year business loan with a 7% interest rate, then you will pay the interest on the full principal amount the first month that you have the loan. As you approach month 60 of your 120 month term loan, you have paid down a significant amount of the principal. As such, the interest expense is less as you now paying back the principal more so than the interest due on the loan. However, your monthly payment is exactly the same as it was when the loan began. In the BusinessLOC.com toolkit we have provided you with a loan amortization calculator that you can use to compute the expect costs associated with undertaking a credit obligation on a monthly basis.
	Below are a number of articles that you can read that will assist you in obtaining a business LOC:
	Business LOC vs. Business Loan Securing a Business LOC Do You Need a Business Plan to get a Credit Line? How has the Economy Affected People's Ability to get Credit? Unique Business LOC Types Property Rehab Loans and Lines of Credit What is a Warehouse Line of Credit? Businesses Best Suited for a Business LOC Alternatives to Business Credit Facilites Using Personal Credit Cards Instead of Business LOC The Mechanics of a Business Loan The Mechanics of a Business Line of Credit Importance of Establishing a Business Line of Credit Using a Business LOC for Startup Capital Questions That Will Be Asked By Your Banker The Importance of Personal Credit When Obtaining a Business LOC What is an SBA Backed Business Line of Credit? Determining How Much You Can Borrow Through A Business LOC How a Business Line of Credit Should Be Used Comparing Offers from Banks for Business Lines of Credit Business LOC and the Concept of Leverage Secured Vs. Unsecured Business Line of Credit Using a Business Loan/Credit Line Brokerage Repayment of a Business LOC Commonly Used Terms in Lending Using a Small Bank to Obtain a Business Line of Credit New Business Line of Credit Business Revolving Line of Credit Overdraft Line of Credit Small Business Lines of Credit Accounts Receivable Backed Lines of Credit