Business Term Loan

What is a term loan?

Term financing or business term loans refer to loans offered to businesses by lending platforms. These term loans provide a lump sum of cash upfront in exchange for fixed interest rates and a predetermined repayment schedule (usually 12 to 36 months). Business term loans can be secured by collateral or unsecured, depending on the lender and the amount disbursed.

Understanding the meaning of term loans:

• Lump Sump Financing: Unlike lines of credit, business term loans provide a one-time disbursement of the approved loan amount.

• Fixed Repayment Schedule: Businesses make fixed payments (principal + interest) each month throughout the loan term.

• Flexible Repayment Terms: Compared to long-term loans, business term loans offer shorter loan tenors which allow businesses the flexibility in managing their debts.

• Competitive Interest Rates: Interest rates are determined by individual circumstances and vary depending on factors like creditworthiness, loan amount, and repayment terms.

Business term loans are used for a variety of business needs like purchasing equipment or property, expanding operations, covering short-term cash flow gaps, and more. They can be a valuable tool for businesses seeking a one-time injection of capital to finance specific projects or investments. They offer predictable and manageable repayment terms, making them a suitable option for various business needs.