Term loan - Financial definition

In finance, a term loan refers to a borrowing arrangement where a lender provides a borrower with a specific amount of money upfront, which is then repaid over a defined period through regular installments. These loans typically have fixed interest rates and fixed repayment schedules, distinguishing them from revolving credit facilities like lines of credit.

Term loans are common in various contexts, including corporate financing for capital expenditures, acquisitions, or restructuring initiatives. They offer borrowers predictability in repayment obligations and are often secured by collateral to mitigate lender risk. Examples include commercial real estate mortgages, equipment financing loans, and long-term corporate debt.