A term loan is a loan that is issued for a specific period of time and must be repaid in monthly payments. These loans are normally for a longer period of time, ranging from one year to ten years.

Term loans are upfront sources of income for local and small enterprises for immediate requirements with a long repayment period. These are long-term debts issued by banks and NBFCs, with a payment schedule and interest paid in installments at fixed or floating interest rates.

The entities eligible for applying for a term loan are individuals, salaried professionals, startups, self-employed, manufacturers, traders, artisans, retailers, small business owners, entrepreneurs, sole proprietorships, Micro Small and Medium Enterprises (MSMEs), private and public limited companies, partnership firms, Limited Liability Partnerships (LLPs), co-operative societies, Trusts, NGOs, and so on.

The eligibility criteria for availing of a term loan are as follows

• Criteria for Age: Minimum age is 18 and the maximum age is 65.
• An applicant with an excellent credit history and a high credit score
• A credit score of 750 or higher is required.
• The applicant must have a steady source of income.
• An applicant with no past defaults with any financial institution

There are 3 types of term loans on the basis of duration of repayment. Short-term loans are often repaid within 12 months. Intermediate-term loans, majorly used for purchasing machinery, stocking up inventory or expanding the business, last for up to 84 months. Whereas, long-term loans are repaid over a longer duration, starting from 5 years.

Apart from that, term loans can be divided into two types: secured and unsecured. In secured term loan collateral security in the form of equipment, stocks or real estate property needs to be submitted to the bank or NBFC. Unsecured loans do not require any collateral or security to be submitted to the lender but the rate of interest is higher.

ABV Debt offers an array of commercial loans like term loans without any hassles of heavy documentation. The fastest turn-around time and payment flexibilities make it ideal for generating commercial funds.