Bank Credit ,Bank Loan and Bank Funded Credit Explained.
Funded loans are credit facilities in which the funds of a bank is directly involved. In such loans, there is an actual transfer of funds from the bank to the borrower. Say, a business owner approaches a bank to secure financing in the form of a business start-up loan. After completing the requisite documentation, a loan is approved. Post-approval, the bank disburses the approved loan amount directly into the customer’s business account. Since there’s an actual transfer of money from the lender (bank) to the borrower (business entity), it is called a funded loan.