Financial Awareness - Risk, Stability & Emerging Finance
Which of the following loans is generally granted for a fixed tenure and is primarily used for capital expenditure or business expansion?
Which of the following loans is generally granted for a fixed tenure and is primarily used for capital expenditure or business expansion?
medium Q15 of 15
Step-by-Step Solution
Step 1: Identify loan purpose and tenure
Term Loan is granted for a fixed period and used for capital expenditure or business expansion.Step 2: Differentiate from other loans
Overdraft and Cash Credit are short-term working capital facilities; Demand Loan is repayable on demand and short-term.Final Answer:
Term Loan → Option CQuick Check:
Term Loan = fixed tenure for capital expenditure ✅
Quick Trick: Term Loan = fixed period for fixed assets.
Common Mistakes:
- Confusing Term Loan with Cash Credit or Overdraft due to loan nature.
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