When a bank is granting a credit for a single person - can I say the Bank is doing an investment in this person or is there a different meaning of investment vs. bank granting a credit? Can I say that "granting a credit" is a special case of investment?

  • 4
    This is not really an English question as more a question of financial semantics. Yes, when a bank extends a line of credit or offers a loan to an individual, it can be considered an investment, but the bank wouldn't usually call it that. Unless, perhaps, the credit or loan was especially large or a significant portion of the bank's balance sheet, or it sounds good for advertising.
    – Andrew
    Feb 14, 2017 at 19:39
  • 2
    Typically the bank lends money at a known rate of return. So to call a loan an investment would be to muddy the waters. Now, if the bank lent me money and told me to do my best to pay it back, and that they would be happy with whatever amount of interest I could pay them, then I would think they were investing in me.
    – TimR
    Feb 14, 2017 at 20:00
  • 1
    @TRomano: Please sign me up for a loan on those terms.
    – LMS
    Feb 14, 2017 at 21:26
  • 1
    Low low interest. <fine print>Your firstborn as collateral. Offer void where prohibited by law</fine print>
    – TimR
    Feb 14, 2017 at 22:13

1 Answer 1


Giving credit (a loan) is a special case of making an investment in a company or endeavor. Usually when an investment is made, equity in the company is exchanged, which means the person making the investment may suffer a loss along with the owners if the company is unsuccessful. In the case of credit, the credit will be paid back before any equity holders in the case the company goes under.

It also means, the holder of the credit on the company will not participate in the upside of the company if it makes a fortune.

Credit (loan) has lower risk and lower potential return.

You are correct in using the phrase

granting credit

which is what the bank does, it grants a line of credit to the company. The most usual line is called

revolving line of credit

which is a credit line used to smooth over the time of receipts for the company during it's daily operations.

You must log in to answer this question.

Not the answer you're looking for? Browse other questions tagged .