Term Loan

A term loan is the most common form of business lending. A lender advances a fixed sum of money, which is repaid in regular instalments (usually monthly) of capital and interest over a defined term. At the end of the term, the loan is fully repaid and the facility closes.

Term loans can be secured (property or assets used as collateral) or unsecured (no security required). Secured term loans typically offer lower rates, higher amounts, and longer terms. Unsecured term loans are faster to arrange and require no collateral but carry higher rates to compensate for the additional risk.

Term loans are distinct from revolving credit facilities (where funds can be drawn, repaid, and redrawn repeatedly). They are also distinct from overdrafts (which are demand facilities with no fixed term). For a defined, one-off funding requirement with a known repayment timeline, a term loan is usually the most appropriate structure.

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