Finimpact
Why Do Businesses Get Term Loans?
Businesses often use term loans to invest in growth or to cover unexpected costs. For example, a business might use a term loan to buy equipment or real estate or to cover repairs for an essential machine.

Using a term loan gives a business years to repay the money.

What Are the Types of Term Loans?
There are many types of term loans. The primary difference between the many types of loans is generally the term of the loan, which can range from less than one year to more than 25 years.
What Are the Common Attributes of Term Loans?
Term loans can have fixed or variable interest rates but all of them will have fixed repayment schedules, usually monthly or quarterly payments. They all have fixed maturity dates by which the loan will be paid off if the borrower follows the minimum payment schedule.

Conclusion

Term loans are useful business tools that companies can use to invest in growth or cover unexpected expenses. While borrowers have to pay interest and fees, it can be worth the expense to invest in the future. Make sure you have a clear plan for how to benefit from the loan and do your best to maintain good credit to keep costs low.

About the Author

TJ Porter

TJ Porter

Personal Finance Writer

I have in-depth experience in reviewing financial products such as savings accounts, credit cards, and brokerages, writing how-tos, and answering financial questions both simple and complicated.

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