A Term Loan is a business loan for a fixed period with a structured repayment schedule, typically used for asset purchases, business expansion, or longer-term funding. Term loans may be secured (backed by collateral) or unsecured (based on cashflow and credit history). They complement facilities like Business Lines of Credit, Working Capital Loans, and Invoice Finance.

Why Term Loans Matter

Term Loans provide predictable repayment schedules, helping businesses plan cashflow and investment. They are important for SMEs in the Tradie Hub, Truckie Hub, Café Hub, and Whitecoat Hub.

• Structured repayments improve cashflow planning
• Secured term loans enable higher borrowing amounts
• Supports equipment, vehicles, or property acquisitions
• Complementary to other finance facilities like LOC or Invoice Finance

How Term Loans Work

• Loan is approved with a set principal, interest rate, and term.
• Repayments are scheduled (weekly, monthly, or quarterly) over the term.
• Secured term loans require collateral, unsecured rely on cashflow & credit.
• Funds can be used for business expansion, asset purchases, or working capital.
• Early repayment may involve exit fees or prepayment penalties.

Lenders consider Credit Limit, Borrowing Capacity, and Facility structure when issuing term loans.

Related Switchboard Resources

• Business Line of Credit
• Working Capital Loans
• Invoice Finance
• Secured Business Loan
• Unsecured Business Loan
• Early Termination

Official guidance: business.gov.au