There may be situations where you are unable or for whatever reason, do not wish to seek investments from friends, relatives or investors. Or the amounts you have in your savings as well as that obtained from their investments are inadequate for the needs of your business venture. You therefore have to consider getting a loan.
Usually entrepreneurs will approach a financial institution like a local bank for the business loan. Getting a business loan is not that much different from seeking an investment from an angel investor. You need to present your business plan and try to convince the party on the other side that you will make enough money to pay back the loan and still have a bit left.
Even if the financial institution agrees to loan you the amount requested. it will probably ask for collateral. Collateral refers to assets belonging to you which can be pledged as security against the loan. An example of a collateral is the property that you own. In the event that you default on the loan, the financial institution can force sell the collateral to recover the amount owed.