This is a monetary loan that is repaid in regular payments over a set period of time. They are usually structured such as repayment can be covered in mid to long term. The ability to repay over a long period of time is attractive for new or expanding enterprises, as the assumption is that they will increase their profit over time, due to such an elongated tenor their charges are usually subject to changes in market conditions.

Key Features

  • They are secured loans, where assets financed through it serve as primary security and the other assets of the company serve as collateral security.
  • Its maturity period is mid to long term as it is a source of medium-term financing.
  • Repayment is usually made in instalments.