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What is a Term Loan?
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What is a Term Loan?

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Catherine Daly
Content Strategist
Photo by Scott Graham on Unsplash

A term loan is where investors provide a lump sum amount of cash upfront against specific borrowing terms. Like revenue-based financing investors, term loan investors view recurring revenue as an “asset” on which to secure the loan.

Term loans are typically tailored to your business based on your specific metrics, and the cost of capital is risk-adjusted to reflect your company’s unique characteristics. The business repays the loan over an agreed term (i.e., 2-3 years).

Unlike revenue-based financing, term loan repayments are very low (interest-only or similar) in the beginning to keep working capital in the business—even in high-growth periods). There is usually a balloon payment at the end of the term to cover the balance.

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Catherine Daly
Content Strategist

Catherine joined TIMIA Capital as a freelance copywriter and social media manager in January 2019. She has 15 years experience in marketing and held senior positions at a number of technology companies including Hootsuite, Absolute, and Avnet Technology Solutions. Catherine is an expert writer and marketer and holds an executive Masters in Marketing, a Bachelor of Science in Communications and Journalism, and a Diploma in Digital Marketing.