Comment on the following: Term loan is associated with some specific features.

Features of Term Loan: Loan in any Currency: These loans are provided both in home or foreign currency. Home currency loans are offered normally for purchase of fixed assets such as land, building, plant and machineries, preliminary and preoperative expenses, technical know-how, working capital etc. On the other hand, foreign currency loans are offered for import of certain plant or machinery, payment of foreign consulting fee etc. Secured Loan: Term loans come under secured category of loans. Two kinds of securities are there - primary and collateral. Loan Installments: Repayment of loan is done in installments. These installments cover both principal and interest. Normally, loan installments are decided by banks based the borrower's cash flow capacity. There may be installments paid monthly, quarterly, biannually, or even annually. Maturity: Normally a term loan is ranging between 5 to 10 years. Forecasting for more than 10 years in the current changing business environment is very difficult. Loan Agreement: An agreement is drafted between the borrower and the bank regarding the terms and conditions of the loans which is signed by the borrower and is preserved with the bank. Loan Covenant: Covenants are a part of loan agreement. They are certain statements in the agreement which states about certain do's and dont's for the company.