Funded interest term loan
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
20 December 2013
What is meant by Funded Interest Term Loan??? Pls Explain.
Nikhil Kaushik
(Expert)
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.
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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