Capex funding matched to what the asset earns.
A term loan funds a defined capital purpose — expansion, a new production line, acquisition of an existing unit, or a one-time large purchase — repaid on a fixed schedule over a tenure matched to the asset's productive life.
Matching tenure to purpose
A term loan is only as good as the tenure discipline behind it. Funding a five-year asset over ten years reduces the EMI but pays more total interest and leaves you servicing debt on equipment that has already been superseded. Funding a fifteen-year building over five years does the opposite — strains cash flow needlessly.
Lenders test two things: the purpose is real and demonstrable (a quotation, a project report, an acquisition agreement), and your cash flow can service the EMI on top of existing obligations, generally at a DSCR of 1.25–1.50x. Security can be the asset being funded, an existing property, or a mix; unsecured term loans exist but at a materially higher rate and shorter tenure.
A moratorium is available where the funded asset takes time to become productive — a new line, an acquired unit under integration. Negotiate it at sanction; asking afterwards rarely works.
Indicative pricing in 2026
Secured term loans against property or the funded asset price well below unsecured facilities.
Public Sector Banks
Tier-1 Private Banks
NBFCs & HFCs
Getting a term loan sanctioned cleanly
State the purpose precisely
Vague purposes ("business expansion") get generic scrutiny and slower processing. A named machine, a specific unit being acquired, or a defined capex line with a quotation attached moves through credit committees far faster and supports a cleaner sanction.
Do not let existing EMIs go unaccounted
DSCR is computed on combined post-sanction debt. Borrowers who forget an existing unsecured loan or a running overdraft when projecting servicing capacity are routinely surprised when the sanctioned amount comes in lower than expected. Model everything upfront.
Negotiate the moratorium before signing
If the funded asset needs time to reach output, ask for a moratorium at sanction stage. Lenders are far more flexible before disbursal than after; a request to pause EMIs six months in is a very different, much harder conversation.
Documents required
Incomplete files cause most multi-week delays. We assemble the full set upfront, in the order credit teams read it.
KYC & constitution
- PAN & Aadhaar of all promoters / partners / directors
- Certificate of incorporation, MOA-AOA or partnership deed
- Board resolution or partners' authority letter
- GST registration & trade licence
Financials
- 3 years ITR with computation of income
- Audited balance sheet, P&L and schedules
- 12 months' bank statements of all operating accounts
- GST returns for the last 12 months
- Existing loan sanction letters & repayment track record
Purpose documents
- Quotation, proforma invoice or purchase agreement for the funded asset
- Project report or business case for the expansion
- Property papers, where security is offered
How we place a term loan
Purpose and DSCR check
We confirm the purpose is fundable and model DSCR on your full post-sanction debt before approaching any lender.
Security and structure
Secured, unsecured or hybrid structured to get the best combination of rate and tenure for your situation.
Placement across the panel
Filed with lenders whose policy fits the purpose, run in parallel for competitive tension.
Sanction and disbursal
Terms finalised, moratorium confirmed in writing where applicable, funds disbursed against the stated purpose.
Related facilities & deep-dive guides
Every facility below is placed through the same 80+ lender panel. The long-form guides carry the working numbers, worked examples and lender-by-lender detail.
Frequently Asked Questions
The questions our advisory desk is asked most often about Term Loan for Expansion.
A term loan funds a one-time capital purpose — a machine, a building, an acquisition — repaid on a fixed schedule. Working capital funds the recurring gap between paying suppliers and collecting from customers, drawn and repaid continuously.
Using a term loan for working capital, or vice versa, is a common structuring mistake that costs more than it needs to over the life of the facility.
Yes, up to a point. Unsecured term loans are available to established businesses with strong financials, but at materially higher rates — often 12–14% versus 9–11% secured — and shorter tenure.
Where you can offer the funded asset or an existing property as security, the interest saving over a five-to-ten year tenure is usually substantial.
Against the lower of the project cost and what your cash flow can service. Lenders typically fund 60–80% of project cost and require a DSCR of 1.25–1.50x on total post-sanction debt.
Overstating projected revenue to inflate eligibility is visible to any competent credit analyst and simply delays the file. Realistic projections place faster.
On floating-rate loans to individuals and to micro and small enterprises, RBI restricts prepayment charges, with MSE protections tightened further from 2026. Larger corporate and fixed-rate facilities can still carry charges.
Check your specific sanction letter; foreclosure terms vary by lender and loan type.
This is exactly what a moratorium is for. If negotiated at sanction, you service interest only through the moratorium period, with principal beginning once the asset is expected to be earning.
Without a moratorium, a delayed ramp-up simply means servicing full EMIs on an asset not yet producing — which is why the moratorium request belongs at the sanction stage, not after.
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