Term Loan

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About Term Loan Types Documents Required Term Loan Features Eligibility Criteria

What is Term Loan ?

A term loan is often intended to cover an organization's one-time capital needs for the duration of the loan. The demand for capital may be for working capital as part of a composite loan, or it may be for the purchase of land, buildings, machinery, or other business-related necessities. Both industrial and non-industrial borrowers engaged in manufacturing, providing services, or trading are eligible for the loan. According to how long it will last, term loans are often categorised as either short term or long term.

Types

Types of Term Loan 

Short-Term Loan

Usually reimbursed in no more than five years.

Long Term Loans

Term loans can have a repayment period of 5 to 30 years and can be classified based on the security requirement of the lender.

Secured

To use this, some form of collateral security must be provided. For business loans, the majority of banks and NBFC lenders look for suitable security.

Unsecured

Unsecured working capital loans are available on digital platforms without the need for collateral. These loans can be up to Rs. 2 Cr and are typically short-term, with a repayment period of 2 years.

Documents Required

Documentation for Term Loan

  • PAN card of the individual and the business enterprise as the case may be.
  • Bank statements as specified by the lender. In Lendingkart we seek it for 12 months.
  • Aadhaar card of the individual promoter.
  • Project report with technical feasibility and economic viability.
  • Address proof of the individual as well as the firm.
  • ITR, balance sheets, and P&L statements as required for specified periods.
  • Proof of the existence of the business, including all registration certificates.
Term Loan

Term Loan Example – Retails

Home Loan

  • It is a typical long-term loan given to a person or group of people in order for them to become homeowners. Such loans often have an extremely long repayment period of between 15 and 30 years.

Education Loan

  • Those who choose to pursue higher education are given this loan, which has very flexible terms. For loans up to Rs. 4 Lakh, most banks do not require collateral. Loan repayment begins one year after the course of employment has ended, whichever comes first, and there is a moratorium period. The maximum repayment term is seven years.

Car Loans & Personal Loans

  • A person who wants to buy a car can use simple financing methods to pay for it. Typically, the repayment period lasts up to five years. These are personal loans for people to use to cover costs ranging from weddings to urgent medical care. They are typically liquidated after three years.
Features

Features of Term Loan

  • Flexible loan tenors.
  • Competitive interest rates that change depending on the loan's length. The interest rates on long-term loans are lower.
  • Business term loans on the digital marketplace are offered without security. On the other hand, the loans are typically just temporary.
  • Nowadays, most lenders provide online processing. The conditions of business loans are set online for the latest digital platforms.
Eligibility Criteria

Eligibility of Term Loan

  • Age: There is a maximum age for a person that ranges from 55 to 70 years old.  
  • Depending on the lender, the business enterprise must have been in operation for at least six months.
  • During the previous three months, the limit for turnover was, conservatively speaking, Rs. 90K.

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