Funded interest term loan

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Querist : Anonymous (Querist)

20 December 2013 What is meant by Funded Interest Term Loan??? Pls Explain.

Nikhil Kaushik

Nikhil Kaushik (Expert)
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20 December 2013 generally, during deep restructuring, banks give the borrower loans to pay interest component. Such loans are referred to as funded interest term loans.

for eg: a company has got into a lot of problems due to which it is not in position to meet its debt obligations including interest. So if banks restructure such a loan, they may calculate the interest payment due for a certain future period (vary from case to case) and give the borrower a loan equivalent to such interest amount. Such a loan can only be used to make interest payments and is (after the moratorium) repayable a normal term loan.

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