Bank term loans

By | March 15, 2011

Term loan are loans offered by banks and financial institutions to borrowers who will have to repay the amount in a specific repayment schedule with floating interest rates. Term loans are generally offered for businesses.

Term loans are  borrowed for the operations of small business units; it is not a personal loan. The loan amount is not always issued as a lump sum amount but in specific installments ensuring the growth of the business. The special feature of the loan is the moratorium period which allows the borrower to pay the monthly installments after the stabilization of the business. This does not mean that the interest is not generated but gets accumulated and can be paid later. During the moratorium period the borrower will have to repay only the interest on the credit, the repayment of principal along with the interest can be made after the moratorium period

Term loans are classified into two board categories namely intermediate loans and long term loans. Intermediate loans are loans which has maturity period less than three years. The intermediate loans are expected to be paid on a monthly installment basis. Long term loans are loans offered for a time period of more than three years, its maturity period ranges between three to ten years. Long term loans use business assets as the security for the term loans offered.

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About Pradeep Yuvaraj

Pradeep Yuvaraj is a Co-Founder and Director at Finerva Financial Solutions Private Limited, a financial education company focused on personal finance education. He has penned over 250 articles relating to Personal Finance and clocked over 500 hours of educating individuals on managing personal finance. He is a serial entrepreneur and has been associated with 7 Start-ups. His entrepreneurial experience spans industries as varied as Education, Gas Engineering, Automobile Design, Software development and more recently a Pure play presentation design company. Prior to turning entrepreneur in 2005, he has worked for 3 of the top ten companies of the world - Shell, ExxonMobil and Total SA. This experience included handling Branch Operations, Channel Sales and Business Development across 5 states over a period of 8 years. He holds an MBA from Symbiosis and an Electronics Engineering Degree from the University of Pune.

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