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Term
Also called repayment term, duration, tenor.
The length of time over which a facility is repaid — fixed and enforceable on a loan, and only an estimate on a receivables purchase where repayment moves with sales.
Drafted with AI assistance. Not yet independently checked. Nobody has verified the claims on this page against a source, so treat the figures and legal points as a starting point rather than as settled, and confirm anything you are about to act on. How we check things.
What it means
On a loan the term is a contractual maturity. Payments are calculated to retire the balance by that date, the date appears in the note, and failing to pay by it is a default. On a line of credit the equivalent concepts are the commitment period and the repayment period for each draw, which are not the same thing.
On a merchant cash advance there is no maturity date in that sense, and there should not be one. The agreement runs until the purchased amount is delivered. The "term" quoted in a broker's offer sheet is an estimate produced by dividing the purchased amount by the expected daily remittance. If receipts run higher the advance finishes sooner; if lower and reconciliation is applied, it finishes later.
That is why term is the variable brokers use to make a payment look manageable. Extending an estimated term at the same factor lowers the daily debit without lowering the total cost by a cent, and on a pre-computed loan it raises the total cost.
Where this one catches people
A fixed end date printed on an advance offer sheet is a modelling output, not a promise. Its presence in a contract is worse than useless — an agreement that requires full repayment by a date certain regardless of receipts looks less like a purchase and more like a loan, which is one of the features courts have examined when deciding how to characterise these transactions.
Worked through
Illustrative only. $60,000 purchased amount at $500 a day estimates a 120-business-day term. At $400 a day the estimate is 150 days. Same money, same total, different payment — and if the offer sheet quoted 1.30 in both cases, the cost was never affected by the term at all.
Figures in the example are illustrative. They show the arithmetic, not a quote — what any one lender would charge is on that lender's page, where it is published at all.
Where you will meet this term
Read next
Term — common questions
What does term mean?
The length of time over which a facility is repaid — fixed and enforceable on a loan, and only an estimate on a receivables purchase where repayment moves with sales.
Where does term catch people out?
A fixed end date printed on an advance offer sheet is a modelling output, not a promise. Its presence in a contract is worse than useless — an agreement that requires full repayment by a date certain regardless of receipts looks less like a purchase and more like a loan, which is one of the features courts have examined when deciding how to characterise these transactions.
Is term the same as an interest rate?
Term is defined above; if you are comparing it against a rate, check whether the two measures share a time dimension before you put them side by side.
Which products does term apply to?
Merchant Cash Advance, Working Capital, Term Loan, Business Line of Credit.
Is there a worked example of term?
Yes, on this page, and it is labelled illustrative. It shows the arithmetic, not a quote from any lender.
What else should I read alongside term?
Amortization, Factor rate, Specified percentage, Term loan, Total repayment amount.
Has this definition been checked?
Not yet. This entry is drafted and live, and the notice at the top says so. Confirm anything you are about to act on.
Is this legal advice?
No. It is a definition. What a clause does in your contract, in your state, is a question for a lawyer licensed where you are.
Can I suggest a term?
Yes — [email protected]. The glossary grows from what people are actually shown in contracts.