To entice consumers, all banks provide “Term Loan” as a financial product. The majority of lending institutions get their goods in the form of a term loans. They are most often short-term loans for SMEs, long-term loans for businesses, or intermediate-term loans for renting or asset purchase. But what exactly is a Term Loan?
A Term Loan is a loan whose maturity period ranges between one and ten years, with interest to be repaid over that period. The instrument was created to provide public or corporate entities with financial support for a set period of time. These are of three types: short term loans , Long term loans, and intermediate-term loans. To understand it better, let’s dive deeper into the classification.
Types of Term Loan
Short term loans
It’s a one-year loan with the specific objective of covering unforeseen cash problems. It may either assist to shield a loss and hence increase cash flow, or it can help to generate a significant profit from the usage contract. They also include business term loan Singapore and They can be used as working capital in the manufacturing business to acquire inventories. Short term loan Singapore is considered the best type of term loan for businesses residing in Singapore.
A term loan plan with a repayment period of 1 to 5 years is known as Intermediate Term-loan. After short-term loans, Intermediate loans are the most used by Small Medium enterprises. Repayment might come from the profit earned by the loan or from a variety of other sources. Equity term loan Singapore is one example of intermediate term loan.
Mortgage loans with long-term terms are often used to finance real estate and other assets. Depending on the amount of the loan, it might or might not make a profit, and the payback will take more than five years. Lower risk of loan disbursement exists because of mortgage collateral. long term loan Singapore is mostly not used by SMEs but by established businesses.
Whether you are an SME or an established business, taking a loan is a tough decision. However, with proper legal consultation, a business can leverage term loans. Therefore, you might need to consider consulting a term loan Singapore based company like Ethoz. Ethozgroup is one of the best Financial solution companies in Singapore. You can visit the Ethozgroup website to get more insights.