Term Loans

A term loan is a loan from a lender that provides a lump sum of money to be paid back, with interest, over a set period of time. This repayment is made in regular, fixed intervals, such as monthly. Term loans are used for various purposes, including business expansion, equipment purchases, and working capital. 

Key features of a term loan

• Repayment: Borrowers pay back the loan in fixed, regular payments (e.g., monthly) over a specific time frame.
• Lump sum: The entire loan amount is given to the borrower upfront.
• Interest rates: Interest rates can be fixed, remaining constant throughout the loan’s life, or variable, changing with market conditions.
• Purpose: Commonly used by businesses for major investments like buying equipment, real estate, or financing long-term growth strategies.
• Security: Some term loans are secured by collateral, such as property or equipment, while others can be unsecured.
• Duration: The “term” refers to the length of the loan, which can be short-term (1-2 years) or long-term (up to 25 years). 

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