Term Loans
Term loans are a traditional debt vehicle a company establishes to allow it to borrow funds for a particular period of time, or term. Typically, these types of loans carry specific requirements that the company must meet for the loan to remain in effect. For example, companies might have to maintain certain liquidity or not enter into additional loans. Over the life of the loan, the borrower pays interest for the use of the funds, and by the end of the term loan, the financer receives the principle back.
Term loans are fairly straightforward for companies to use. Companies often prefer these loans because they can easily enter into them. However, term loans often have only a limited amount of funds companies can borrow, which is why companies also issue bonds.