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TERM LOAN
Definition
Loan from a bank/credit union, repaid in installments over a fixed term.
Who Provides It
Banks, credit unions, institutional lenders.
Eligibility
Based on lender criteria (credit score, collateral, business plan, cash flow).
Loan Amount
Varies; can range from thousands to millions.
Risk to Lender
100% borne by lender if borrower defaults.
Collateral / Security
Usually secured by assets (business/personal).
Interest Rates
Negotiated; competitive for qualified borrowers (prime + spread).
Fees
Origination/processing fees vary.
Use of Funds
Flexible (subject to lender approval).
Application
Directly through the lender; requires strong documentation.
Approval Speed
Moderate; banks require due diligence.
Best For
Established businesses with strong credit needing predictable financing.
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