Loans: A financial institution pays out a loan amount to another corporation or individual in consideration for future repayment of the same amount plus interest over some time.
Advances: Banks supply the source of finance supplied by banks to businesses to satisfy their short-term needs (less than one year). Advances, as opposed to loans, are a type of credit arrangement. The central bank (RBI in India) and the bank lending the money decide on the terms of the advances.
- The monetary value of a loan is generally smaller than that of a cash advance.
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