A term loan is extended by lenders as a means of finance for specific purposes on certain pre-agreed borrowing terms.

Term Loan could be for financing purchase of an asset, financing operations of subsidiaries, acquisition finance, strengthening working capital position, refinancing of existing loan, etc.

Lender extends Term Loan to a Borrower  for certain specific purposes.

Term Loan has a pre-agreed repayment schedule which is typically based on the future cash flow and the repayment capacity of Company.

The interest on Term Loan is either fixed rate or floating rate of interest.

Generally, Lenders require certain portion of the total financing requirement to be met by the Borrowers from their own sources and the balance amount of total financing requirement is contributed by the Lender as a Term Loan.

Typically, Term loan value covers 50% to 80% of the total financing requirement.

The tenor of the Term Loan can be short-term of say 12 months to a long tenor of say 12 years. The tenor of the loan is determined by the purpose of the loan, cash generation, borrower financial condition, etc.

Term Loans are generally secured. However, term loans are also extended on an unsecured basis.