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Loan Term The loan term of a loan is the amount of time that the borrower is given in which to pay back a loan. Small businesses that seek loans need to choose a loan term that they will realistically be able to pay the loan back. In most loan situations, the loan is divided into monthly amounts that include principal and interest payments that will allow the loan to be paid back by the time the loan term rolls around. Sometimes, however, the loan does not have a required monthly payment, but the agreement is that the small business will pay the loan back by the loan term. Even if a small business's loan does not require monthly payments, it is a good idea to make monthly payments to avoid having a large sum when the loan term comes around. Good budgeting will make payments each month so that the loan can be paid back on time, if not early. More Glossary Terms Explained here |
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