What is the difference between a bank loan and a bond issue?

What is the difference between a bank loan and a bond issue Introduction: The Quest for Capital Hello, and welcome to our video on the distinctions between bank loans and bond issues. When organizations, whether they are corporations, governments, or even individuals, require funds for various purposes, they often turn to these two financial instruments. While they may seem similar at first glance, a closer examination reveals significant disparities. The Basics: Bank Loans Let's start with bank loans. A bank loan is a form of debt financing, where an entity borrows a specific amount from a financial institution, typically a bank. The loan is usually repaid over a predetermined period, along with interest. Bank loans can be either secured, where the borrower provides collateral, or unsecured, where no collateral is involved. The interest rate on a bank loan is generally fixed, meaning it remains constant throughout the loan's tenure. The Intricacies: Bond Issues Now, let's delve into bond issues. A bond is essentially a debt instrument, similar to an IOU, issued by an entity, often a corporation or a government. When an organization needs substantial funds, it may opt for a bond issue. Unlike a bank loan, where the funds come from a single lender, a bond issue involves multiple investors, who purchase the bonds.