Term lending facilities refer to those financing instruments through which banks meet the non-working capital needs of their clients.

I. Term loans
Term loans refer to instrument of financing where a loan is availed by a borrower with repayment in periodic installments over a pre-specified period. Such term loans could either be for a project or for purchase of an asset. Project financing largely follows the pattern of project loans from Financial Institutions with the tenure being between 7-10 years including a moratorium of upto 2 years.

However, banks do not generally extend project loans in case of SMEs except in case of longstanding clients with a good track record. The interest rate in case of the term loans from banks depend upon the credit rating of the client but tend to be lower than that of the state financial institutions on account of lower cost of funds.

Loans for purchase of assets (vehicle, equipment) are of a medium term nature with loan periods extending from 3-5 years. In case of these loans, the main competition to banks arises from the non-banking financial institutions (NBFCs). The NBFCs compete primarily on response time while interest rates tend to be higher. In recent times, banks are also facing competition from a new quarter in these loans that of Packaged Financing where the manufacturer (either on its own or through a tie-up with a preferred financier) arranges financing of its products.

II. Equipment and Vehicle Financing
Banks have entered into Equipment and Vehicle Financing in a big way in the last few years. The Equipment and Vehicle Financing is largely on the lines of NBFCs and has been covered in detail in that section.

Working Capital Financing
Non-fund based Facilities from banks
Equipment Financing

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