What best describes a term loan?

A term loan is best described as a loan with principal repayment on a defined schedule. This structure means that borrowers receive a lump sum of funds upfront, which they then repay in regular installments over a specified period. These payments typically include both principal and interest. The schedule is predetermined, providing certainty for the borrower in terms of cash flow planning and debt repayment over the life of the loan.

The characteristic of having scheduled repayments distinguishes term loans from other types of loans, such as revolving credit facilities or lines of credit, where borrowers have more flexibility regarding when and how much they repay.