Term loan is extended to part finance the purchase of Machinery/Equipment.

Lenders require certain portion of the purchase price of the Machinery/Equipment to be met by the Borrower from their own sources and the balance amount of purchase price is contributed by the Lender as a Term Loan.

Term loan amount generally covers 50% to 80% of the total purchase price of the Machinery/Equipment.

Lender extends the Term Loan to a Borrower  on certain repayment schedule with a fixed or floating rate of interest.

The tenor of the Term Loan for equipment/machinery is 3 years to 7 years. The tenor of the loan is determined based on the future cash flow, borrowers’ financial condition, etc.

Term Loan is secured by a charge on the machinery/equipment financed by the said Term Loan.

Typically, the drawdown of the Term Loan is made directly to the Seller of the Equipment/Machinery.