1

loan

noun \ ˈlōn \
Updated on: 17 Nov 2017

Definition of loan

1 a : money lent at interest
  • took out a loan to pay for the new car
b : something lent usually for the borrower's temporary use
2 a : the grant of temporary use
  • Can I have the loan of your car?
b : the temporary duty of a person transferred to another job for a limited time
  • He had been on loan to the navy during the war.
3 : loanword
  • The word "nosh" is a loan from Yiddish.

Examples of loan in a Sentence

  1. He got a car loan.

  2. He'll need several more years to pay off the rest of the loan.

  3. She needed money, so she asked her friend for a loan.

Recent Examples of loan from the Web

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'loan.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

Origin and Etymology of loan

Middle English lon, from Old Norse lān; akin to Old English lǣn loan, lēon to lend, Latin linquere to leave, Greek leipein


2

loan

verb

Definition of loan

transitive verb
: lend

loanable

play \ˈlō-nə-bəl\ adjective

loan vs. lend

The verb loan is one of the words English settlers brought to America and continued to use after it had died out in Britain. Its use was soon noticed by British visitors and somewhat later by the New England literati, who considered it a bit provincial. It was flatly declared wrong in 1870 by a popular commentator, who based his objection on etymology. A later scholar showed that the commentator was ignorant of Old English and thus unsound in his objection, but by then it was too late, as the condemnation had been picked up by many other commentators. Although a surprising number of critics still voice objections, loan is entirely standard as a verb. You should note that it is used only literally; lend is the verb used for figurative expressions, such as "lending a hand" or "lending enchantment."


Examples of loan in a Sentence

  1. The National Gallery has been kind enough to loan this painting to our museum.

  2. His mother loaned him the money to buy a new car.

  3. Can you loan me $20?

Recent Examples of loan from the Web

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'loan.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

Origin and Etymology of loan

see 1loan

loan Synonyms

Synonyms
advance, lend
Antonyms
borrow
Related Words
furnish, give, grant; lease, let [chiefly British], rent
Near Antonyms
receive, take

Financial Definition of LOAN

loan

What It Is

In the business world, a loan is an amount borrowed.

How It Works

Let's assume Company XYZ has invented a new product that will revolutionize the widget market. The company is sure there will be demand from billions of people around the world, and therefore it needs to build a new factory. If Company XYZ's funds for constructing the factory were limited to its cash on hand, say $200,000, it certainly could not build the kind of factory it needs to capitalize on this tremendous opportunity and would thus be very limited in its output and profits (and would leave the market wide open for competitors to fill the void). With a loan, however, Company XYZ could build the factory and take advantage of the profit potential of its product. The debt essentially magnifies the profits.

In the business world, bank loans and corporate or government bonds are the most common. For individuals, loans can be personal loans, mortgages or lines of credit.

Why It Matters

A loan is a liability, meaning the lender has a claim on a company’s assets. Loan payments due within one year are generally classified as short-term debt on a company’s balance sheet. Loan payments due in more than one year are considered long-term debt. It is important to note that loans commonly come to mind when one considers liabilities, but not all liabilities are loans. Companies may incur other types of liabilities, including (but not limited to) upcoming payroll, bonuses, legal settlements, payments to vendors, certain derivatives, contracts, certain types of leases, and required stock redemptions. Common balance sheet categories for liabilities include accounts payable, accrued expenses, and debt.

Information about a company’s debt is a key component of accurate financial reporting and a crucial part of thorough financial analysis. Excessive debt can ruin a company but is not always detrimental. The use of debt financing can magnify profits that would have otherwise gone unrealized.


term loan

What It Is

A term loan has a set maturity date and usually has a fixed interest rate.

How It Works

Let's say Company XYZ wants to borrow $1 million to build a factory. It meets with its bank, ABC Bank, to negotiate the loan. The company and the bank agree to a 10-year loan with quarterly payments and a 7% interest rate.

Term loans often mature within 10 years, but this is negotiable. They usually require collateral. Not all banks make term loans, and an existing relationship with a bank is usually helpful.

Why It Matters

Term loans are very common, and they provide a level of certainty to the borrower and the lender. The borrower usually has access to the full amount of principal upfront, knows when to make payments, and knows how much to pay. The lender knows that the principal will be repaid over time on a regular basis.



LOAN Defined for English Language Learners

loan

noun

Definition of loan for English Language Learners

  • : an amount of money that is given to someone for a period of time with a promise that it will be paid back : an amount of money that is borrowed

  • : permission to use something for a period of time


loan

verb

Definition of loan for English Language Learners

  • : to give (something) to (someone) for a period of time

  • : to give (money) to (someone) who agrees to pay it back in the future


LOAN Defined for Kids

1

loan

noun \ ˈlōn \

Definition of loan for Students

1 : money given with the understanding that it will be paid back
2 : something given for a time to a borrower
  • That's not mine, it's a loan.
3 : permission to use something for a time May I have the loan of your car?

2

loan

verb

Definition of loan for Students

loaned; loaning
: to give to another for temporary use with the understanding that the same or a like thing will be returned
  • loan a book
  • loan money

Law Dictionary

loan

noun

legal Definition of loan

1 a : money lent at interest
b : something lent usually for the borrower's temporary use
2 : a transfer or delivery of money from one party to another with the express or implied agreement that the sum will be repaid regardless of contingency and usually with interest; broadly : the furnishing of something to another party for temporary use with the agreement that it or its equivalent will be returned
  • the leasing of the car was termed a loan
bridge loan
: a short-term loan used as a means of financing a purchase or enterprise prior to obtaining other funds
  • used a bridge loan to purchase a new home prior to the sale of the old one
conventional loan
: a loan for the purchase of real property that is secured by a first mortgage on the property rather than by any federal agency
demand loan
: a loan that is subject to repayment upon demand of the lender
home equity loan
: a loan or line of credit secured by the equity in one's home called also equity loan, home equity line, home equity line of credit; see also qualified residence interest at interest 5
loan for consumption \-kən-ˈsümp-shən\
: a loan in which the borrower is obligated to return property of the same kind as that borrowed and consumed used chiefly in the civil law of Louisiana; — compare bailment, deposit, loan for use in this entry
loan for use
: a loan in which one party lends personal property to another with the understanding that the borrower will return the same property at a future time without compensation for its use : commodatum used chiefly in the civil law of Louisiana; — compare bailment, deposit, loan for consumption in this entry
participation loan
: a single loan in which two or more lenders participate
term loan
: a loan extended to a business with provisions for repayment according to a schedule of amortization and usually for a period of one to five years and sometimes fifteen years


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