Business Term Loan

A business term loan is a general term for the type of business loan that is given by a bank or other financial institutions for a fixed amount having a specific repayment term. It is one of the most common types of business loan and is structured in a wide variety based on different parameters. The repayment term also varies greatly ranging from one to ten years. Term loan are to be paid back by the borrowing company from the profit it gets from its business in accordance to a fixed pay back schedule. This loan provides businesses sufficient working capital to manage its operations or to finance purchase of equipments, thereby generating cash flow. It is ideal for small and start up businesses to purchase fixed asset to either set up or expand their growing business, and repay the amount from the profit they generate.

It is often advisable to seek the help of a broker who can negotiate with the bank and get the repayment term fixed in accordance with the projected cash flow pattern of your bank. You can get secured or unsecured business term loan to fulfill your business needs. Secured term loans are those where your loan application is backed with collateral, while unsecured term loans are those which are not supported by any collateral. The interest rate charged by the bank in case of former is less than in case of latter because of increased risk involved for the lender in case of an unsecured loan. There are options to pay back the loan monthly, quarterly, semiannually, or annually.