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Term Financing

What is the meaning of term financing?

Also known as Business Term Financing (BTF), it is a type of unsecured financial support offered by lenders to businesses to enhance and grow. This financing product provides a lump sum of money upfront that the borrower needs to repay over a fixed period with regular instalments. Unlike other financing options, term financing does not typically require borrowers to pledge collateral.

These are some of the key features of term financing:

  • Fixed Repayment Terms: The repayment schedule is predetermined, with fixed monthly or quarterly instalments.

  • Financed Amount: Term financing typically offers larger financing amounts compared to other options.

  • Interest Rates: Term financing may have fixed or variable interest rates.

  • Shariah Compliant: Some lenders also offer term financing options that comply with Islamic principles for financing.

Ultimately, term financing is a practical option for businesses seeking additional funding for various purposes, including purchasing equipment, expanding operations, or covering working capital needs.