With the large profits that can be gained from lending, it is not surprising that many businesses are venturing into offering loans. In the past, banks were the only source of loans; economy has proven that there can be several other lending and financing institutions that provide different types of loans to anybody who needs them and who has the capacity to pay.

Banks still serve a major proportion of borrowers. Their main advantage is that most are well-know and have extensive networks, especially for banks which have branches all over the country. Their large financial resources enable them to offer a wide array of loans that customers can choose from, whether they be businesses or individuals. Some large banks even hire brokers to help market loans and accept applications via the Internet.

Aside from the banks, loans are also provided by building societies and credit unions. These organizations are not in the lending business for profit and offer very competitive interest rates. However, not everyone can avail of the loans that they offer since they only serve a limited clientèle – those within a local geographic area or those that share a common employer or occupation.

An alternative source of loan is the retail lender. Lenders of this type offer their own brand of loan products. Although they may not be as well-established and recognized as the banks, it would be to the benefit of the borrower to consider them since some retail lenders do offer competitive interest rates, low fees and excellent service. In fact, retail lenders have given banks a fairly good competition in acquiring customers. This competition in modern economy has been advantageous to the public since it has made interest rates lower.

Lastly, there are the specialist non-bank lenders which cater to customers who do not fit the profile of the standard loan borrower. These include those with very poor credit ratings and whom other lending institutions deem as ineligible for loans; or those who seek a secured loan but can only put up collateral which other lenders find unacceptable. Due to the higher risk they take, specialist lenders offer loans with higher interest rates.

Considering the choices available, it is only right for the borrower to try to find the most appropriate loan provider. However, this would largely depend on what his own criteria are, such as the amount he wishes to borrow, the terms that he can afford to pay and the condition of his credit rating. The best loan provider is the one which can satisfy his requirements.