Loan terms with extension options make it easier for borrowers to manage timing
By Erik Tellefson
The length of time between a loan closing and its maturity (loan term) is an important consideration when evaluating lending options. A loan term that is too short may not allow for the borrower to execute on its business plan, while an overly long one will likely be more expensive due to unnecessary additional time. The latter may also be prohibitive to a sale or recapitalization during the loan term, resulting in time wasted while waiting to close on the next deal for the subject asset.
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