Term Loan

A term loan provides a fixed amount that the borrower repays in regular instalments over an agreed period at a fixed or floating interest rate.

Key Characteristics

• Fixed loan amount disbursed upfront.
• Predetermined monthly or quarterly repayment schedule.
• Fixed or floating interest rate.
• Secured or unsecured based on collateral requirements.
• Typically used for business expansion, equipment purchase, or working capital.

Common Products

Product Name	Description
Equipment finance	Supports the purchase of machinery and equipment.
Working capital loan	Provides financing for operational funding needs.
Project finance	Provides long-term funding for eligible projects.
Personal term loan	Provides consumer financing for eligible personal needs.

Operational Workflow

1. Receive the application and required supporting documents.
2. Assess the borrower's creditworthiness and evaluate the facility risk.
3. Approve the facility and issue the facility letter or loan approval letter.
4. Complete the required conditions precedent and disburse the funds.
5. Set up and monitor the equated monthly instalment (EMI) collection.
6. Perform ongoing account maintenance, monitoring, and follow-up.

Example Calculation

Scenario: A borrower receives SGD 100,000 for five years at an annual interest rate of 8%, with monthly compounding and monthly repayments.

Let $P$ be the principal, $r$ the monthly interest rate, and $n$ the number of monthly repayments.

$$\text{EMI} = P \times \frac{r(1+r)^n}{(1+r)^n-1}$$

where $P = 100{,}000$, $r = 0.08/12$, and $n = 60$.

$$\text{EMI} \approx \text{SGD }2{,}027.64$$ $$\text{Total interest} = (2{,}027.64 \times 60) - 100{,}000 \approx \text{SGD }21{,}658.40$$

Compliance and Monitoring

• Track monthly instalment collections and overdue amounts.
• Review credit quality and impairment indicators regularly.
• Classify credit quality in accordance with applicable accounting standards, regulatory requirements, and bank policy.
• Report portfolio performance quarterly.
• Conduct periodic facility reviews where required by the facility terms or bank policy.