Term Loan
Short definition
A term loan is a non-revolving facility with a set principal, tenor and repayment schedule. It is the spine of capex and acquisition finance; the balance does not swing freely.
Detailed explanation
It is drawn in an availability period, then closed by amortisation or a bullet. Tranches (A amortising, B/C longer/bullet) carry different prices and covenants. Prepayment fees and cash sweeps cut the balance ahead of the schedule.
Match permanent need to term, temporary need to an RCF. The reverse is a maturity mismatch.
Why it matters for the CFO
Tenor match for capex and M&A sits in this product. Funding investment on an RCF builds a wall.
How to read it
Remaining tenor / amortisation profile reveals near-term DSCR pressure.
Related calculators
Güven Sayılgan’s writing on this topic
The Hidden Rules of Getting Bank Credit
In bank lending decisions, what matters most is not only the documents submitted but the risk profile the firm presents. A strong application should include a s
3 min read
Read → FinansHow Much Can a Company Borrow?
Debt capacity should not be judged by how much banks will lend or by Net Debt/EBITDA alone. In Türkiye the relevant test is whether interest and principal can s
9 min read
Read → FinansHow Should Firms Be Financed in a High-Interest Environment? 15 Core Principles
In a high-interest environment, financing decisions must be made with greater care. Fifteen principles for assessing cost, maturity, currency, and cash-flow eff
3 min read
Read →Read these first
Related terms
What to learn next
Definitions are educational. They are not investment, credit or tax advice.