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A term loan is a type of financing where a borrower receives a lump sum of money upfront and repays it over a predetermined period, typically with fixed monthly payments that include both principal and interest. These loans can range from short-term (less than one year) to long-term (several years), depending on the borrower's financial needs and repayment capacity. Businesses often use term loans to finance significant investments such as purchasing equipment, expanding operations, or managing working capital requirements.
For businesses and individuals, term loans offer several advantages. They provide access to substantial funding, allowing you to undertake large projects or investments without depleting cash reserves. Fixed repayment schedules make budgeting easier, as you can plan finances with predictable monthly payments. Additionally, the interest rates for term loans are often competitive, particularly for borrowers with strong credit profiles, making them a cost-effective financing option.

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