A term loan is a straightforward form of business borrowing: a company receives a set amount once and repays it, with interest, in instalments over an agreed period known as the term.
How a term loan works
Once the funds are drawn, repayments follow a schedule until the balance reaches zero at the end of the term. The predictability of fixed instalments makes a term loan easy to plan around.
- You borrow a defined amount at the start.
- Repayments are spread across the agreed term.
- Each repayment covers interest and reduces the principal.
When it suits a business
Term loans suit planned, one-off needs, such as buying equipment, funding a project or covering a known cost, where you want certainty over repayments. They contrast with revolving facilities, which let you draw and redraw funds repeatedly.
Credicorp offers Credicorp Flex and Credicorp Slice to UK limited companies and LLPs for business purposes. The amount, rate and term for your facility are set out in your own offer rather than any general example. Credicorp is an exempt business lender, so the Financial Ombudsman Service and FSCS do not apply. Our team can explain which product fits a particular need.
See also: What is a revolving credit facility?, Can I shorten or extend my loan term? and How much can my business borrow, and for how long?.