Bank Loans encapsulate monies or credits extended by banks to businesses. Bank loans are normally interest-bearing debt and are almost always categorised as excess debt. In business valuation analysis, bank loans are considered part of the debt portfolio of the business and as a result are treated purely as debt instruments. Because the cash flow method applied in business valuation is net of debt, normal cash flows are adjusted by deducting bank loans together with other debt instruments to arrive at the debt free cash flow which is discounted to arrive at the enterprise value. The market value of any outstanding debts and other debt related instruments are deducted from the enterprise value to arrive at the value of equity.