6 Disadvantages Of Bank Loans

1. The main disadvantage of a bank loan is the security that usually has to be given to the bank over the assets of the business. The bank becomes a secured creditor with collateral over the business assets. If the business fails, then the bank has first call on what is left (before the shareholders). 2. One of the greatest disadvantages to bank loans is that they are very difficult to obtain unless a small business has a substantial track record or valuable collateral such as real estate.  3. Interest rates for small-business loans from banks can be quite high, and the amount of bank funding for which a business qualifies is often not sufficient to completely meet its needs. 4. loans aren’t very flexible.