A term loan is a type of loan where a borrower receives a lump sum of money upfront and agrees to repay it over a fixed period of time (the “term”), typically through regular payments that cover both principal and interest.
Key characteristics:
-Fixed or variable interest rate
-Specified loan tenure (e.g., 1 year, 3 years, 5 years)
-Often used for business expansion, capital expenditure, or large personal purchases
-Can be secured or unsecured, depending on lender and borrower profile