Dawn owns a hair salon and wants to open another store in the downtown shopping district. She goes to the bank to get a loan to start her business, and the bank gives her a loan that is backed by her good reputation and previous credit rating. Which type of bank loan does this scenario best describe?

Question

Quizplus · Accepted Answer

This scenario describes an unsecured loan, which is backed only be the borrower's good reputation and previous credit rating. Both individuals and businesses build their credit rating from their history of borrowing and repaying borrowed funds on time and in full.

Dawn Owns a Hair Salon and Wants to Open Another