Term loans have several advantages over corporate bonds, including which of the following?

Term loans indeed offer distinct advantages over corporate bonds, particularly in areas like speed, flexibility, and low issuance costs.

When companies seek to finance their operations or projects, term loans can often be arranged quickly compared to issuing corporate bonds, which can be a lengthy process that involves drafting a prospectus and going through regulatory reviews. This speed can be crucial for businesses needing immediate funding.

Flexibility is another significant advantage; term loans can be customized more readily to fit the borrower’s specific needs, including the amount borrowed, repayment schedule, and other terms. This adaptability allows companies to negotiate terms that better suit their cash flow circumstances and operational strategies.

Lastly, the issuance costs for term loans tend to be lower than those for corporate bonds. The costs associated with bond issuance include underwriting fees, legal expenses, and registration fees, which can add up significantly. Conversely, obtaining a term loan typically incurs fewer costs, making it a more economical option for companies looking to raise funds quickly and efficiently.

These factors make term loans an attractive financing option for many businesses, especially when time and cost are critical considerations.