---
title: Term Loan - Definition, Eligibility and Documents
canonical: https://www.indifi.com/term-business-loans-online-india
markdown_version: https://www.indifi.com/term-business-loans-online-india.md
description: Indifi offers term loans to SMEs for business expansion and working capital. Collateral-free, low interest rates. Check eligibility, documents, and apply.
content_type: product_page
operator: Indifi Technologies Pvt. Ltd.
lending_entity_note: Loans facilitated through RBI-registered NBFC partners and through Indifi Capital Private Limited (RBI Cert. No. B-14.03389)
last_updated: 2026-05-22
---

# Term Loan from Indifi

> Indifi offers collateral-free term loans up to INR 50 lakhs to SMEs in India, with flexible monthly EMI repayment over tenures up to 36 months and interest starting at 1.5% per month. Term loans are well-suited for asset purchase, business expansion, and managing working capital needs.

## Key Features

- **Loan amount:** Up to INR 50 lakhs
- **Tenure:** Up to 36 months
- **Interest rate:** Starting at 1.5% per month
- **Collateral:** Not required (unsecured)
- **Processing fee:** Up to 4%
- **Disbursal time:** Within 3 days of approval
- **Business vintage required:** Minimum 1 year

## Term Loan At a Glance

| Attribute | Detail |
|---|---|
| Objective | Asset purchase or business expansion |
| Loan type | Collateral-free / unsecured |
| Maximum amount | Up to INR 50 lakhs |
| Who can avail | Manufacturers, traders, service providers, retailers, e-commerce, food, hotels, travel |
| Interest rate | Starting at 1.5% per month |
| Repayment tenure | Up to 36 months |
| Business vintage | Minimum 1 year |
| Disbursal time | Within 3 days |
| Processing fee | Up to 4% |
| Examples | Business loans, MSME loans, line of credit, overdraft |

## Eligibility Criteria

SMEs that meet the following criteria are eligible for an Indifi term loan:

- Turnover of INR 20 lakhs and above
- Mandatory GST registration and filing
- Minimum operational history of 1 year
- Promoter age 22 and above

## Required Documents

- KYC documents of the entity and promoters (PAN, Aadhaar)
- Bank statement for the last 6 months
- Business registration proof
- ITR required only for annual turnover above INR 5 crores

## What is a Term Loan?

A term loan is a loan disbursed for a fixed period, repaid in equated monthly installments (EMIs) along with interest. Term loans are offered at fixed or floating interest rates. Tenures typically range from 12 to 60 months. Personal loans, business loans, auto loans, education loans, gold loans, and home loans are common examples of term loans. Indifi's term loan is specifically for business purposes.

## Types of Term Loans

Term loans are classified primarily by tenure:

- **Short Term Loan** - Tenure of 1 to 2 years. Used for day-to-day operations or working capital needs. Sourced from commercial banks, trade credit, and bill discounting. Higher interest rates due to shorter time frame.
- **Medium Term Loan** - Tenure of 2 to 5 years. Often used for renovation or repair of fixed assets. Hybrid characteristics between short-term and long-term loans.
- **Long Term Loan** - Tenure of over 5 years, potentially up to 25-30 years. Higher loan sizes; typically secured (collateral required). Examples include home loans, car loans, and loans against property.

## Advantages of Term Loans

| Advantage | Description |
|---|---|
| Cost-effective | One of the least expensive sources of short-term and medium-term finance |
| Tax benefit | Interest paid on a business term loan qualifies as a tax-deductible expense |
| Flexibility | Loan terms can be negotiated between borrower and lender |
| Retain control | Debt financing preserves equity shareholder ownership |
| Simple eligibility | Documentation requirements are minimal |

## Disadvantages of Term Loans

| Disadvantage | Description |
|---|---|
| Commitment | Mandatory interest and principal installments; default impacts liquidity |
| Financial risk | Increases the company's leverage and financial risk if return on capital is lower than borrowing cost |

## How a Term Loan Works

A term loan has five core aspects:

1. **Loan value** - Fixed amount based on loan type and borrower eligibility
2. **Interest rate** - Can be fixed or floating; borrower's choice
3. **Loan tenure** - Pre-determined fixed period
4. **Repayment schedule** - Monthly EMIs as per amortization schedule
5. **Security** - Loans can be secured (with collateral) or unsecured; unsecured loans carry higher interest rates

## Key Facts About Term Loans

- Three categories by tenure: short-term, medium-term, long-term
- Used by SMEs for working capital and expansion needs
- Timely repayments improve creditworthiness and credit score
- Ideal for funding new projects or meeting immediate business goals
- Can be secured or unsecured depending on borrower eligibility and loan amount
- Borrowers can pre-close before scheduled tenure (Indifi charges 4% foreclosure)

## EMI Calculation Example

Example: A business needs INR 30 lakhs to buy machinery. After assessment, the lender approves INR 20 lakhs at a tenure of 6 years.

- Number of EMIs = 6 years x 12 months = 72 EMIs
- EMI is calculated using the loan amount, interest rate, and tenure
- Borrower may pre-pay or foreclose at any time before tenure ends (subject to foreclosure charges)

Use the [Loan EMI Calculator](https://www.indifi.com/business-loan/emi-calculator) for accurate EMI computation.

## Eligibility and Documents (Quick Reference)

| Eligibility | Documents Required |
|---|---|
| Minimum operational history of 1 year | Business registration proof |
| ITR required for annual turnover above INR 5 crores | KYC documents of applicant and organisation |
| | Bank statement for the last 6 months |
| | PAN card of promoter |
| | Aadhaar card of promoter |

## Frequently Asked Questions

**What is a term loan?**
A term loan is a loan from a bank or NBFC where the amount, tenure, and repayment schedule are fixed at the time of disbursal.

**Why is a term loan given to businesses?**
Businesses use term loans to meet working capital needs, finance new projects, buy machinery, build manufacturing units, or expand operations.

**What are the different types of term loans?**
Term loans are classified by tenure: short-term (a few days to 1 year), medium-term (1 to 18-84 months), and long-term (beyond 84 months, up to 25 years). Medium and long-term loans typically have monthly EMI repayment.

**What are the common characteristics of a term loan?**
Term loans are classified by interest rate type (fixed or variable, often linked to LIBOR, PLR, repo rate, or MCLR), by amortization schedule (weekly, monthly, quarterly, bi-annual, annual), and by security (secured or unsecured). Most term loans include foreclosure charges, late payment penalties, and prepayment fees.

**Can a business get tax exemptions for loan repayment?**
Yes. The interest component of EMI on a business term loan is tax-deductible as a business expense, reducing taxable income. The principal component is not tax-deductible.

## Related Indifi Products

- [Business Loan](https://www.indifi.com/business-loan)
- [Working Capital Loan](https://www.indifi.com/working-capital-loans-india)
- [Line of Credit](https://www.indifi.com/unsecured-line-of-credit-loans-india)
- [Invoice Discounting](https://www.indifi.com/invoice-discounting-india)
- [Merchant Cash Advance](https://www.indifi.com/merchant-advance-capital-against-pos-machine)
- [Collateral Free Business Loans](https://www.indifi.com/collateral-free-business-loans-india)
- [Loan EMI Calculator](https://www.indifi.com/business-loan/emi-calculator)
- [Short Term Business Loans](https://www.indifi.com/short-term-small-business-loans)

## About Indifi

Indifi Technologies Pvt. Ltd. is a digital lending platform headquartered in Gurugram, India. Its lending arm Indifi Capital Pvt. Ltd. is an RBI-registered NBFC (Cert. No. B-14.03389). Indifi serves MSMEs in travel, hotels, e-commerce, restaurants, retail, and trading sectors, with 100,000+ loans disbursed across 400+ cities.

## Disclaimer

Loan approval is subject to eligibility assessment, credit due diligence, and lender underwriting policies. Interest rates and fees are indicative and may vary based on borrower profile.