If economics followed the laws of nature in the sense that credit or debt didn’t exist and there could subsequently be no way of lending and borrowing money, the development of the technology we use as the human race would have been a lot slower. Sure, there are arguments suggesting that greed has taken over and so our development has slowed down in any case, but it would have still been much slower were it not for the ability to lend and borrow.
Consider this scenario:
Imagine there’s a newly-qualified civil engineer from a rural village who is friends with a talented, self-taught web developer. The duo want to start up a community development centre which is to be designed by the civil engineer, and once built and operational it would seek to attract local talent to come and develop all their skills and talent and turn that into something tangible which can be sold and can be deployed to help develop the local community further.
This scenario exists in so many different forms and places, playing out in many different environments, or rather it remains a mere idea as a result of the fact that there is often no money to get the ball rolling. The qualified, skilled, creative, visionary people who have these ideas for the development of their communities and of humanity don’t quite have access to the capital required to get things going.
This is when we start to see just how important debt is, more from the point of view of the borrower than the lender of course.
In this case you’d probably want to go for something like a business loan as perhaps the most logical option for borrowing the money you’d need, but it’s not that simple and it shouldn’t be that simple.
There are many different types of loans available, each of which offer different terms in terms of how much you can borrow, how long you’d have to pay the money back and what interest rates would be tied to the repayments. For example, if you’re perhaps looking to run a business you want to start as a one-man consultancy, going for a personal loan might make for a better route to take than going for a business loan. A personal loan gets approved much quicker for example and this makes for just one of the reasons you might choose to go this route, even though you would probably qualify for a traditional business loan.
To get a little deeper into the example of the personal loan for business purposes – in order to be approved for a business loan you would have had to produce a lot more paperwork with regards to things like your business assets which can be used as collateral, company registration documents, etc.
So it would make every bit of sense to go through something like the Loanable broker to help you best match the type of loan you need to the lender, which isn’t necessarily the one which is suggested by the nomenclature used to define the corresponding type of loan, i.e. a personal loan isn’t necessarily for personal financial problems, etc.