Also called: Amortising loan
Term loan
A term loan is a facility advanced as a fixed amount at the start and repaid over a set period through scheduled repayments. Once repaid, the facility ends — funds cannot be redrawn unless a redraw feature exists.
What is a term loan?
A term loan is a facility advanced as a fixed amount at the start and repaid over a set period through scheduled repayments. Once repaid, the facility ends — funds cannot be redrawn unless a redraw feature exists.
Example
A $200,000 term loan over 36 monthly repayments of principal and interest closes when the final repayment is made.
Why it matters
It suits a defined purchase or project; recurring cash flow gaps are usually better served by a revolving facility.