BFI Blog

Financing

According to Investopedia, “Financing is the process of providing funds for business activities, making purchases, or investing.” Banks and other financial institutions provide capital to businesses, consumers and investors to assist in funding projects and other needs. Financing is typically provided after a credit check, where the financial institution will determine the credit-worthiness of an applicant before extending capital. Once approved and funds are provided, they must be used for the purpose designated by the institution providing the funds. All financing options contain an interest rate, APR and APY. Some lenders will not charge a pre-payment fee, which is when a loan is paid off prior to the end date by making extra payments, while some lenders to charge a fee to compensate for any lost interest due to prepayment. All loans must be paid back as determined in the loan agreement or it will reflect negatively on the applicant’s credit, impacting their ability to get a future loan.

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