A term loan is a standard commercial loan from a bank for a specific amount that has a specified repayment schedule and a fixed or floating interest rate. Often used to pay for a major investment in the business or an acquisition.
The loans often have fixed interest rates, with monthly or quarterly repayment schedules and a set maturity date. For example, many banks have term-loan programs that can offer small businesses, the cash they need to operate from month to month. Often, a small business uses the cash from a term loan to purchase fixed assets such as equipment for its production process.
term loans are divided into two categories
Usually running less than three years, these loans are generally repaid in monthly installments from a business's cash flow.
These loans are commonly set for more than three years. Most are between three and 10 years, and some run for as long as 20 years. Long-term loans are collateralized by a business's assets and typically require quarterly or monthly payments derived from profits or cash flow. These loans usually carry wording that limits the amount of additional financial commitments the business may take on (including other debts but also dividends or principals' salaries), and they sometimes require that a certain amount of profit be set-aside to repay the loan
REQUIRED DOCUMENTS FOR THE TERM LOAN:- (All copies of documents should be self attested by the customer)
Note on provisional Accounts for the period
Analysis of Profit & Loss A/C
Analysis of Balance Sheet
Query list sent to proposed borrower dated.
Replies given by borrower from time to time
Process for Term Loan:
Particulars of the industrial concern
Particulars of the project (capacity, process, location, land and buildings, plant and machinery, etc...)
Cost of project
Means of financing
Marketing and selling arrangements
Profitability and cash flow