Financially, a loan is a contractual promise of a debtor to repay a sum of money in exchange for the promise of a creditor to give another sum of money.
The borrower initially receives an amount of money from the lender, which they pay back, usually but not always in regular instalments, to the lender. This service is generally provided at a cost, referred to as interest on the debt. A borrower may be subject to certain restrictions known as loan covenants under the terms of the loan. The creditor will often ask for some security (e.g. a car, property, etc.) owned by the debtor as surety against non-payment of the loan.
Unsecured loans are monetary loans that are not secured against the borrowers assets. Often these are more expensive. In some instances the government will at as a surety for the loan in schemes to help companies start up.
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