Features of a term loan include
1) restrictive covenants
2) repayment schedules
3) dividend payments
A)1 and 2
B)1 and 3
C)2 and 3
D)only 2

Question

Features of a term loan include
1) restrictive covenants
2) repayment schedules
3) dividend payments​
A)1 and 2​
B)​1 and 3
C)​2 and 3
D)​only 2

Quizplus · Accepted Answer

1) Restrictive covenants are included in a term loan to ensure that the borrower operates within certain guidelines or restrictions during the life of the loan. These covenants may include restrictions on the borrower's ability to take on additional debt, sell assets, or pursue other business activities that could negatively impact the lender's ability to recover their funds.

2) Repayment schedules are a key feature of any term loan. This outlines the timeline and structure of the loan payments, including the amount of each payment, the interest rate applied, and the total loan duration. This provides clarity and predictability for both the borrower and the lender.

3) Dividend payments are not typically a feature of a term loan, as they are a distribution of profits to shareholders rather than a repayment of debt. Therefore, Choice B and C are incorrect, and D is incomplete as it only includes repayment schedules without mentioning restrictive covenants.

Features of a Term Loan Include