Term loan can be used for purchasing land, building or machinery for starting a new business or expanding an existing business. Term loan are provided for acquiring or constructing or installing or establishing capital assets, which will provide returns over a period of time. Term loans will also be repaid in regular payments over a period of time, as the asset generates returns.
Term loans are usually provided for acquiring or constructing building and acquiring or installing plant and machinery. Term loans in India are provided for a tenure of anywhere between 3 to 10 years based on the project, projected financials and other factors. The interest rate for the term loan will be based on the credit worthiness of the borrower and is usually a fixed spread over the banks base lending rate.
Term loan is a type of loan, which has to be paid in regular installments over time. Term loans are typically sanctioned for acquiring or constructing or installing capital assets like building, plant and machinery.