Purpose-bound
Drawn for a defined asset, expansion or project rather than for general expenses.
Business & working capital · Loan guidance
Term loan, explained.
A long-tenure loan for a specific purpose — machinery, premises or a project — repaid on a fixed schedule.
What it is
The instrument, in plain terms.
A secured loan with a defined end-use and tenor, drawn for a specific purpose such as equipment, expansion or a project, and repaid through a scheduled plan.
It can suit
- Businesses funding a specific asset, capacity or project with a clear return.
- Requirements where the asset itself can stand as security.
- Borrowers able to contribute a meaningful part of the cost themselves.
It may not suit
- Open-ended or recurring working-capital needs, which limits serve better.
- Projects with uncertain timelines and no cushion for overruns.
The lender’s view
How a lender reads this.
End-use and viability
The lender underwrites the purpose: what the money buys and what it will earn.
Debt-service coverage
The ratio of available cash to debt obligations — DSCR — is central to the decision.
Collateral and margin
Security, its value and the promoter's own contribution shape the terms.
Timeline and contingency
A project that takes longer than planned still has to service its debt on schedule.
Lenders decide on their own assessment. Our work is to make your case complete, consistent and genuinely ready to be read.
Our work
What we prepare with you.
Project or asset economics with realistic, defensible assumptions.
A repayment schedule that still works in a weak year, not just an average one.
Security and margin arranged before the application is submitted.
A contingency plan for delay, cost overrun and slower-than-expected revenue.
Preparation
What a lender usually asks for.
- The project or asset note, with cost estimates and quotations.
- Financial projections and the repayment logic, including a downside case.
- Audited financials and tax returns for recent years.
- Bank statements and details of existing facilities.
- Collateral documents and valuation reports.
- Proof of promoter contribution and net-worth statements.
Mechanics
How it is usually structured.
The shape a lender will typically put around this facility.
Scheduled repayment
A fixed tenure with level or structured instalments, often after a construction moratorium.
Security
A charge on the asset being funded, and often on other assets or a personal guarantee.
Common mistakes
Where borrowers go wrong.
None of these are exotic. They are the ordinary errors that turn a workable requirement into a difficult application.
Mismatching tenor to the asset
Repaying equipment over a term longer than its useful life borrows against nothing.
Building optimism into the model
Aggressive revenue assumptions fail in assessment, or worse, after disbursement.
Forgetting future capacity
A heavy scheduled obligation reduces room for the next loan the business will need.
The full cost
What it costs, beyond the rate.
- Processing fee
- A share of the sanctioned amount, sometimes staged with disbursement.
- Legal, valuation and technical
- Charges for assessing the security and, for a project, the site.
- Insurance
- Asset cover for the tenure, commonly a condition of the loan.
- Prepayment
- Charges on early repayment or refinancing, which can be material on a long-tenure loan.
Language
Terms worth knowing.
- DSCR
- Debt-service coverage ratio — available cash divided by debt obligations due.
- Tenor
- The length of time over which the loan is scheduled to be repaid.
- Promoter contribution
- The share of project cost funded by the owners rather than the lender.
Repayment estimate
What the instalments might look like.
Adjust the amount, rate and tenure for an indicative instalment and total cost. It is a planning aid, not a quote.
Tenure
Estimated monthly instalment
- Total interest
- ₹37,89,715
- Total payable
- ₹72,89,715
- Tenure
- 20 yr
- Principal₹35,00,000
- Interest₹37,89,715
Year-by-year repayment schedule
| Year | Principal | Interest | Balance |
|---|---|---|---|
| 1 | ₹69,658 | ₹2,94,828 | ₹34,30,342 |
| 2 | ₹75,815 | ₹2,88,671 | ₹33,54,527 |
| 3 | ₹82,517 | ₹2,81,969 | ₹32,72,010 |
| 4 | ₹89,810 | ₹2,74,676 | ₹31,82,200 |
| 5 | ₹97,749 | ₹2,66,737 | ₹30,84,451 |
| 6 | ₹1,06,389 | ₹2,58,097 | ₹29,78,063 |
| 7 | ₹1,15,793 | ₹2,48,693 | ₹28,62,270 |
| 8 | ₹1,26,028 | ₹2,38,458 | ₹27,36,243 |
| 9 | ₹1,37,167 | ₹2,27,319 | ₹25,99,075 |
| 10 | ₹1,49,292 | ₹2,15,194 | ₹24,49,784 |
| 11 | ₹1,62,488 | ₹2,01,998 | ₹22,87,296 |
| 12 | ₹1,76,850 | ₹1,87,636 | ₹21,10,446 |
| 13 | ₹1,92,482 | ₹1,72,004 | ₹19,17,964 |
| 14 | ₹2,09,496 | ₹1,54,990 | ₹17,08,469 |
| 15 | ₹2,28,013 | ₹1,36,473 | ₹14,80,456 |
| 16 | ₹2,48,167 | ₹1,16,318 | ₹12,32,288 |
| 17 | ₹2,70,103 | ₹94,383 | ₹9,62,185 |
| 18 | ₹2,93,978 | ₹70,508 | ₹6,68,207 |
| 19 | ₹3,19,963 | ₹44,523 | ₹3,48,245 |
| 20 | ₹3,48,245 | ₹16,241 | ₹0 |
Indicative only. Not specific to your circumstances. It excludes processing fees, insurance, taxes and any lender-specific charges, and it is not an offer of credit.
On rates
Why we don’t publish a single rate.
Pricing is set by each lender, not by us. Two borrowers approaching the same lender on the same day can be offered different rates, because the number reflects both the facility and the person behind it.
What moves the rate you are offered:
- Your credit record and how past borrowing has been serviced.
- The security offered, and how readily it could be realised.
- The tenure and the structure of the facility.
- Your income or business profile, and how well it is documented.
- The lender’s own cost of funds and internal policy.
- Fees, insurance and margin that belong in the all-in cost, not the headline.
A single advertised rate would misrepresent all of that. What we do instead is help you compare the whole cost, and understand what is actually negotiable in your case.
Questions borrowers ask
How long should the tenure be?
- Match it to the asset's working life. Repaying equipment over a term longer than its usefulness is borrowing against nothing.
What is DSCR and why does it matter?
- Available cash divided by the debt due. Lenders use it to test whether repayment survives a bad year, not just an average one.
Can I draw it in stages?
- Often yes — tied to milestones for a project, or to invoices for equipment. Each draw is documented.
Adjacent borrowing
Related options.
Borrowers considering term loan often weigh these alongside it.
Business loan
Funding for a running business, read from turnover, banking and vintage rather than from a single asset.
↗Cash credit
A running working-capital limit drawn against stock and receivables, renewed periodically.
↗Loan against property
Borrowing against property you already own, for purposes that may have nothing to do with the property itself.
↗Begin here
Discuss this requirement.
Tell us the broad shape of what you need — amount, purpose and timeline. Nothing confidential at this stage.
The Loan CA prepares and advises; it does not lend and cannot promise an approval. Every credit decision rests with the lender, subject to their assessment, documentation and applicable terms. The Loan CA is not licensed, registered or regulated by the Reserve Bank of India, and is not approved, endorsed by, or affiliated with the RBI or the Institute of Chartered Accountants of India (ICAI). Full disclosures →