Question

    Which of the following features best describes a Term

    Loan as compared to a Cash Credit facility?
    A Term loans are primarily used for short-term needs, while Cash Credit is used for long-term financing Correct Answer Incorrect Answer
    B Term loans are repayable in installments over a longer period (5-10 years), while Cash Credit is repayable on demand. Correct Answer Incorrect Answer
    C Term loans are used exclusively for working capital, while Cash Credit is used for capital asset purchases. Correct Answer Incorrect Answer
    D Term loans are usually not secured by collateral, whereas Cash Credit typically requires collateral. Correct Answer Incorrect Answer
    E Term loans are provided for working capital and short-term needs, while Cash Credit is typically used for capital expenditures. Correct Answer Incorrect Answer

    Solution

    Term loans are long-term financing options typically provided for purchasing fixed assets or financing long-term capital needs, repayable in installments. In contrast, Cash Credit is a short-term facility used to finance working capital and is typically repayable on demand or renewed annually.

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