Intermediate term financing refers to loans between 1 to 10 years. It is provided by private banks, finance companies, and insurance companies. Term loans must be repaid in regular installments over a set period of time and have various repayment structures like straight repayment, balloon payment, or deferred principal payment. Borrowers are subject to covenants restricting dividends, debt levels, and asset sales during the loan term.

1. Intermediate Term
Financing
Reported by group 10
Judy Mark Aquitar
Marilou Rubinas
Camille Yson
Sheska De Luna

2. INTERMEDIATE TERM FINANCING
Intermediate term financing refers to
borrowings with repayment schedules of
more than one (1) year but less than ten
(10) years.

3. INTERMEDIATE TERM FINANCING
 It provides a useful
alternatives.
 It provides a source
of funding.
 Tax advantages are
sometimes derived
from the exercised.
 Comparatively high-
cost than shot-term.
 The lender collect
money by selling
borrower’s collateral
security.
 Restrictions over the
borrower.

4. INTERMEDIATE TERM FINANCING
 Convenience in
repayment.
 Flexibility
 Keeping a portion of
loan.
 It is not easy to get
loan for financially
weak, small and new
business.

5. Intermediate term financing is provided by
private commercial banks, finance companies,
insurance and pre-need companies.

6. Private commercial banks [PCBs]constitute an
easily identifiable source of term loans. The
extensive network of branches of PCBs provide
easy access to intermediate term credits.
Example of banks with branches spread all
over the Philippines are the Philippine National
Bank and Metropolitan Bank and Trust
Company.

7. TERM LOAN
A term loan is a monetary loan that is repaid in
regular payments over a set period of time.
Types of Term Loan:
1. Straight Term Loan
2. Revolving Credit
3. Evergreen Credit

8. - include the basic features of
the loan such as repayment
schedules, interest rates, and
maximum commitments.

9. • The borrower is required to maintain a certain
amount of working capital or a given current ratio.
• Borrower is required to furnish the bank of the
creditor with audited annual financial statements
and detailed direct quarterly or monthly
statements.
• The borrower is prohibited to sell or dispose his
business property, except inventories. The
prohibition also includes the pledging of assets to
secure other loans.
• The borrower is required to provide sample
insurance coverage to his business properties and
key employees.

10. • Restrictions are imposed to the borrower
regarding cash dividends and a celling on
officers’ salaries is imposed.
• A restriction is imposed on the borrower
regarding the expansion of fixed assets
beyond the amount of the term load.
• The borrower is prohibited from incurring
additional long term debt or additional
lease obligations.
• The borrower is not allowed to repurchase
the company’s own stock.

11. - The repayment of term loans
depends upon the nature of the
business borrower. Majority of the
ordinary business term loans require
equal periodic payments over the
life of the loan in amounts adequate
to retire the full amount of the
principal. The payment schedule is
based on the borrower’s projected
ability to generate cash.

12. - The loan is repaid in equal amounts of principal. The
installments are unequal, however, because the interest
payment is largest in the first year and become smaller as
the principal is gradually paid.
- This loan is repaid in equal installments under this
type of repayment. The amount applied to principal is
smallest in the first year, then the same payments to
principal gradually increases through the payment years,
the largest which is made on the last year. The
decreasing payment on interests, however, equalizes the
uneven payments on principal.

13. Ex P100,000 loan payable in 10 years at 8% annual interest.

14. Example: P100,000 loan payable in 10 years at 8% annual interest.

15. 3.) BALLOON PAYMENT
Under this repayment program, the loan is
repaid in equal instalments for a number of
years then larger and final payment is made at
maturity date.

17. 4.) DEFERRED PAYMENT OF
PRINCIPAL WITH GRACE PERIOD
A debt which has been incurred and will be paid back at
some point in the future.
 The payment of principal under this program is deferred,
although payments on interest are made. This
repayment program suits loans to fiancé projects with
long gestation periods like new orchard projects and
livestock projects.

19. A variation of the deferred payment plan allows the
borrower a grace period of one to seven years during which the
payment of principal and interest is deferred.

20. Term Lending by Insurance Companies
 Insurance companies are important sources of term
loans. The premiums generated constitute advances to
the insurance companies for periods varying from six
months to five or more years.
this gives rise to funds

21. Term Lending by Finance Companies
 Finance companies were pioneers in the field of
intermediate credit at a time when commercial banks
still emphasized short-term loans and insurance
companies were restricting their business loans to the
purchase of publicly- offered bond of large
corporations. They helped to fill a serious gap in the
financing of small and medium-sized business and aided
the mechanization of industry through the introduction
of installment financing of equipment. Under this
arrangement, a down payment is required and the
balance is paid to the finance company in installments
designed to fit the needs and depreciation schedule of
the firm buying the machinery and equipment.

22. Term Loans by the Government
 The government offers loan programs through different
departments that support individuals, communities and
businesses according to their varied and unique needs.
These loans provide capital for enterprises deemed worthy
by the government that might not qualify for a loan on the
open market.
Individuals and small businesses with little or no seed
capital or collateral may find the conditions for a market
rate loan unaffordable. Low cost government loans
attempt to bridge this capital gap for deserving individuals
and parties, thus enabling long term benefits for the
recipients and the nation.