Debenture vs. Loan — What's the Difference?

Bonds issued by companies to raise money with fixed interest rates.

A lending agreement between a borrower and a lender.

A long-term security issued by a company based on its general creditworthiness without collateral.

Can be secured by collateral or unsecured based on borrower's creditworthiness.

An unsecured loan part of a company’s debt capital.

The act of giving money temporarily on the condition that it or its equivalent will be returned, often with an interest fee.

A debt instrument not secured by physical assets or collateral.

A sum of money borrowed that is expected to be paid back with interest.

A corporate bond that usually involves regular interest payments and a principal repayment at maturity.

Money borrowed to be repaid under terms set between the borrower and lender.

In corporate finance, a debenture is a medium- to long-term debt instrument used by large companies to borrow money, at a fixed rate of interest. The legal term "debenture" originally referred to a document that either creates a debt or acknowledges it, but in some countries the term is now used interchangeably with bond, loan stock or note.

In finance, a loan is the lending of money by one or more individuals, organizations, or other entities to other individuals, organizations etc. The recipient (i.e., the borrower) incurs a debt and is usually liable to pay interest on that debt until it is repaid as well as to repay the principal amount borrowed.

A certificate or voucher acknowledging a debt.

An instance of lending

An unsecured bond issued by a civil or governmental corporation or agency and backed only by the credit standing of the issuer.

A sum of money that is lent, usually with an interest fee

A customhouse certificate providing for the payment of a drawback.

The agreement or contract specifying the terms and conditions of the repayment of such a sum.

A certificate that certifies an amount of money owed to someone; a certificate of indebtedness.

The repayment obligation associated with such an agreement

(obsolete) A certificate of a loan made to the government; a government bond.

The right to payment associated with such an agreement

A type of debt instrument secured only by the general credit or promise to pay of the issuer, not involving any physical assets or collateral, now commonly issued by large, well established corporations with adequate credit ratings.

The state of being lent for temporary use

A document granting lenders a charge over a borrower’s physical assets, giving them a means to collect a debt, as part of a secured loan.

To lend (money or property).

A writing acknowledging a debt; a writing or certificate signed by a public officer, as evidence of a debt due to some person; the sum thus due.

An act or instance of lending, an act or instance of granting something for temporary use.

A customhouse certificate entitling an exporter of imported goods to a drawback of duties paid on their importation.

A sum of money or other property that a natural or legal person borrows from another with the condition that it be returned or repaid over time or at a later date (sometimes with interest).

Any of various instruments issued, esp. by corporations, as evidences of debt. Such instruments (often called debenture bonds) are generally, through not necessarily, under seal, and are usually secured by a mortgage or other charge upon property; they may be registered or unregistered. A debenture secured by a mortgage on specific property is called a mortgage debenture; one secured by a floating charge (which see), a floating debenture; one not secured by any charge a naked debenture. In general the term debenture in British usage designates any security issued by companies other than their shares, including, therefore, what are in the United States commonly called bonds. When used in the United States debenture generally designates an instrument secured by a floating charge junior to other charges secured by fixed mortgages, or, specif., one of a series of securities secured by a group of securities held in trust for the benefit of the debenture holders.

The contract and array of legal or ethical obligations surrounding a loan.

A bond that is backed by the credit of the issuer but not by any specific collateral

The permission to borrow any item.

A certificate or voucher acknowledging a debt

(Scotland) A lonnen.

To lend (something) to (someone).

A loanin.

The act of lending; a lending; permission to use; as, the loan of a book, money, services.

That which one lends or borrows, especially a sum of money lent at interest; as, he repaid the loan.

To lend; - sometimes with out.

The temporary provision of money (usually at interest)

A word borrowed from another language; e.g. `blitz' is a German word borrowed into modern English

Give temporarily; let have for a limited time;

A debenture is a type of debt instrument unsecured by collateral, issued by companies based on creditworthiness.

A loan is a specific agreement where money is borrowed and expected to be paid back with interest, under agreed terms.

No, loans can either be secured or unsecured.

Typically, debentures have fixed interest rates, unlike some types of loans that can have variable rates.

Corporations benefit from debentures by securing necessary capital without diluting ownership through equity.

Since debentures are unsecured, the main risk involves the issuing company’s potential default.

At maturity, the principal amount of the debenture must be repaid to the investors.

No, debentures are typically issued by corporations to raise capital.

Loan interest rates are typically determined based on the borrower’s credit risk, market conditions, and the loan’s duration.

Collateral is an asset pledged as security for repayment of a loan, forfeited in the event of a default.

The duration of a loan can vary greatly, from short-term loans of a few months to long-term loans extending over several years.

Individuals can purchase debentures through investment markets or directly during corporate issues.

No, debenture holders do not have voting rights as they are creditors, not shareholders.

Some debentures, known as convertible debentures, can be converted into equity shares as per the terms specified.

Interest expenses on both loans and debentures are generally tax-deductible for the payer.