terms loan

Term Loans: What Is It and What Are Its Advantages

“Timely return of a loan makes it easier to borrow a second time.”

-Chinese Proverbs

 

Term loan – a financial loan compensated with standard payments until the deadline; usually last between one to ten years or more in some cases. A term loan generally associates uncertain interest rate that will have additional balance that will be reimbursed.

Term Loans are given on a singular basis, but are usually used for small business loans since this type of loan, can be paid over a long period of time; this type of loan is indeed appealing to new or expanding businesses since their profit is expected to raise over time.

What are the benefits of venturing in term loans?

Flexible

– Term loans are as flexible as a gymnast: its duration, amount and interest rates are negotiable even before the loan is accepted.

Low Interest Rates – Term loans usually have low interest rates than short-term personal loans, this is because of their long durations; but the interest rate in this type of loan is fixed and doesn’t change even during a lifetime of the loan.

Tax Advantages and Accounting – Term loans’ interest is tax deductible, so is the amounts of regular check for direct budgeting.

Quick Approval while Maintaining Investor Equity – We all love fast approval cash loan. When your business needs cash, fast, this is where the term loan comes in, since it can be accepted in a short period of time – anywhere from two days to two weeks which still depends on your lender. The term loan is a better and faster option than other kinds of financing, since it is a debt financing and does not affect the interest of the investors’ equity while keeping the company’s equity intact.

Accepting The Term Loan and Accomplishing Payments On Time, Actually Boost Credit Score – Whatever or whoever lender you chose for your business. Your business’ credit score will surely improve when you repay on time and according to the terms you agreed on; this can lead to other funding possibilities at a competitive interest rates.

Grants Practical Cash Flow To Be Used Subsequently – Term loans give your business the authority to make use of their cash flow in other areas, which also provides the money needed when you decide for a larger investment for your business. Example: the term loan can lend you and your business money for you to hire new employees, it also covers the training time your newly hired employees need and grant them to stabilize themselves in your company before actually starting to commit to the bottom line.