Term Loan
A Term Loan is a type of loan provided for a fixed duration, typically used for funding capital expenditure, business expansion, asset acquisition, or long-term project investment. Repayment is done in regular installments over an agreed period, which can range from a few months to several years.
Key Features
- Loan is disbursed in a lump sum and repaid over a fixed tenure
- Tenure usually ranges from 1 to 10 years
- Used for equipment purchase, factory setup, or infrastructure
- Can be secured (against collateral) or unsecured
- Fixed or floating interest rates as per agreement
Eligibility Criteria
- Business must be registered and operating in India
- Satisfactory credit history and financial statements
- Established operational history (typically 2–3 years)
- Clear purpose and plan for using loan funds
Required Documents
- KYC documents of business and promoters
- Business registration/license documents
- Bank statements and ITR (last 2–3 years)
- Audited financial statements and project reports
- Collateral documents (if secured loan)
Benefits
- Provides long-term capital for major business investments
- Flexible repayment through structured EMIs
- Can enhance credit score and financial credibility
- Enables business growth without equity dilution
Top Lenders for Term Loans
Term loans are offered by all major banks and NBFCs including SBI, HDFC Bank, ICICI Bank, Axis Bank, Kotak Mahindra, and SIDBI for MSMEs and enterprises.
Important Notes
- Assess total cost including interest, fees, and charges
- Maintain proper financial records for timely disbursal
- Ensure loan is used strictly for declared business purposes