Government loans are loans that the government of a country
provides to the citizens of that country in order to fulfill their
needs and for their up fitment or betterment. This helps in
reducing the wide gap between the rich and the poor and
streamlines the economy of the country. Government loans almost
are for all sorts of purposes like education loan, loan for
purchasing a house- home loan, loan for setting a business- SBA-
Small Business Loan, purchasing a car, heavy machine etc.
Government loans are broadly divided into two categories- VA and
VA loans are quite beneficial for they require no down payment and
mortgage insurance. They are under the sponsorship of the Veterans
Administration from where the name is derived. These loans are
provided at fixed rates which are not subject to modification. VA
loans are meant only for qualified veterans and not to the rest of
FHA loans can be given to any qualified person who wants it. These
loans are generally opted by those who seek to purchase multi
family properties since they have a seemingly low down payment.
But This type of loan needs a little extensive paper work.
Loans provided by the government outweighs to loans provided by
the private companies. The sole motive behind a private bank or
company’s lending money to people is to earn profits or to
accumulate more wealth. But the government works for the noble
cause of benefit of its citizens. It does not seek to fulfill any
private purpose but the whole idea is to strengthen the country’s
This does not mean that government unlike any other private
company giving loan has no criteria or a set of parameters to
adjudicate who all are eligible for the loan they apply for. But
this criterion is often a mild one. Government at times gives loan
to even those who do not have the potential to repay it. Not just
this but in case of any natural calamity or disaster if those who
have taken the loan become inefficient to pay it back, the
government simply excuses the loan amount.
Interest on government loan when compared to private banks is
significantly low and Moreover the government can provide large
amount of loan for a considerable period of time. This enables one
to have relatively small monthly installments and more security.
Private companies in order to make large profits usually charge
high rates of interests from their customers. The government loans
generally require more documents but that should not undermine
their benefits. While going for any government loan the best one
can do to avoid running around is to opt for a well qualified
agent. These agents do all the official work (like collecting
documents, checking and submitting them) by going from one office
to another. The finest part is that they are not too expensive and
provide you with sufficient knowledge, guidance and service at
It is recommended that students take full advantage of all
government loans available to them before considering a private
Government Loans can be used to:
• Expand or renovate facilities.
• Purchase machinery, equipment, fixtures and leasehold
• Finance receivables and augment working capital.
• Refinance existing debt (for compelling credit reasons of
benefit to the borrower).
• Provide seasonal lines of credit.
• Construct commercial buildings.
• Purchase land or buildings.