Concept of Term Loans

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Term loans are also known as term/project finance. They represent a source of debt finance which is generally repayable in more than one year but less than 10 years. The primary source of such loans are financial institutions. Commercial banks also provide term finance in a limited way. The financial institutions provide project finance for new projects as also for expansion/ diversification and modernization whereas the bulk of term loans extended by banks is in the form of working capital loan to finance the working capital gap.

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