What is the difference between a working capital loan and term loan?

A working capital loan is a short-term loan that allows companies to fund their operations until they get paid by their customers or suppliers. On the other hand, a term loan is usually longer in duration and is meant to provide funds for long-term projects. What are the differences between these two types of loans?

Working capital loans are often used to finance short-term working capital requirements. Term loans, however, are generally unsecured and are designed to meet long-term financing needs.

Working capital loans are typically shorter in duration and are meant to support current operations. In contrast, term loans are usually longer in duration, are intended to cover medium- and long-term financing needs, and are frequently used to acquire fixed assets.

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