A & B are young fashion designers who left their job with a famous fas

1.	A & B are young fashion designers who left their job with a famous fashion designer chain to set up their own venture ‘Fashionate Pvt. Ltd.’ B plans to purchase high quality sophisticated hand embroidery machines to start the venture. A advises B that they should take loan from financial institution as there are different types of loan for different types of needs that can be chosen according to repayment capacity. In the light of above case explain ‘Term loan’ and briefly explain its types on the basis of repayment?
Answer» Term loan: that is repaid in regular payments over a set period of time . Types of term loans based on repayment is as follows: 1. Short Term Loan: Repayable in 1 to 3 years. It is generally used for short term credit like cash credit, personal loan etc. 2. Medium term Loan : Repayable in a period of more than 3 years but within 5 years. These are issued to finance furniture, fixtures, vehicles etc. 3. Long Term Loan: It is repayable in a period of more than 5 years example is Home Loan.

A & B are young fashion designers who left their job with a famous fashion designer chain to set up their own venture ‘Fashionate Pvt. Ltd.’ B plans to purchase high quality sophisticated hand embroidery machines to start the venture. A advises B that they should take loan from financial institution as there are different types of loan for different types of needs that can be chosen according to repayment capacity. In the light of above case explain ‘Term loan’ and briefly explain its types on the basis of repayment?

Answer»

Term loan: that is repaid in regular payments over a set period of time .

Types of term loans based on repayment is as follows:

1. Short Term Loan: Repayable in 1 to 3 years. It is generally used for short term credit like cash credit, personal loan etc.

2. Medium term Loan : Repayable in a period of more than 3 years but within 5 years. These are issued to finance furniture, fixtures, vehicles etc.

3. Long Term Loan: It is repayable in a period of more than 5 years example is Home Loan.