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Term Loan

What is a 'Term Loan'

A term loan is a loan from a bank for a specific amount that has a specified repayment schedule and a fixed or floating interest rate. For example, many banks have term-loan programs that can offer small businesses the cash they need to operate from month to month. Often, a small business uses the cash from a term loan to purchase fixed assets such as equipment for its production process.

A term loan is for equipment, real estate or working capital paid off between one and 25 years. The loan carries a fixed or variable interest rate, monthly or quarterly repayment schedule, and set maturity date. The loan requires collateral and a rigorous approval process to reduce the risk of repayment. A term loan is appropriate for an established small business with sound financial statements and a substantial down payment to minimize payment amounts and total loan cost.

Types of Term Loans

An intermediate-term loan runs less than three years, is paid in monthly installments from a company’s cash flow and may have balloon payments. Repayment is tied to the useful life of the asset financed. A long-term loan runs for three to 25 years, is collateralized by a company’s assets and requires monthly or quarterly payments from profits or cash flow. The loan limits other financial commitments the company may take on, including other debts, dividends or principals’ salaries, and can require an amount of profit to be set aside for loan repayment.

With the understanding of the complexities involved in financial matters associated with business operations, , is specialized and offers consultancy services related to project finance. We arrange Term Loans for companies to achieve their financial goals. We analyze the requirements of the company, design appropriate moratorium and give ample time for repayment with proper justification for the limits. The key objective of Project loan is to support the promoters by offering debt to their ongoing or upcoming projects which gives a leverage effect and help them to invest in a particular project beyond their capacity and fulfill their dream. To acquire the fixed assets like land & building, plant & machinery etc as well as for the working capital which is needed for day to day transition. MFB offers financial assistance to medium and large scale industries in all sectors like star category hotels, resorts, Land & Building, hospitals, Plant & Machinery etc.