A term loan is a type of financing where a borrower receives a specific amount of money from a lender, which is then paid back over a set period, usually with interest. These loans can be used for various purposes, such as purchasing equipment, funding a business expansion, or covering personal expenses. The repayment schedule typically involves regular payments, which can be monthly, quarterly, or annually. Term loans can be classified into short-term, medium-term, and long-term loans, depending on the repayment duration. Short-term loans usually last up to one year, while medium-term loans range from one to five years, and long-term loans extend beyond five years. Lenders, such as banks or credit unions, often require collateral to secure the loan, reducing their risk in case of default.