alleryStart learning →What maturities do term loans generally carry?
AGenerally 5 to 12 years
BGenerally 1 to 3 years
CGenerally 20 to 30 years
DGenerally 30 to 50 years
Answer & Solution
Correct answer: A. Generally 5 to 12 years
1. A term loan is a business loan with a maturity of more than one year.
2. Term loans generally have maturities of 5 to 12 years and can be unsecured or secured.
3. Payments include both interest and principal, so the loan balance declines over time.
4. Borrowers try to arrange a repayment schedule that matches the forecast cash flow from the project being financed.
_Source: OpenStax Introduction to Business (CC BY 4.0), Ch 16 "Understanding Financial Management and Securities Markets", section 16.4 Raising Long-Term Financing_
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