Glossary
Term Loan vs Revolving Credit
Term loans are fixed-amount, fixed-tenure loans; revolving credit (like working capital lines) provides flexible access to capital up to a defined limit. Different uses in startup finance.
By Amit Tyagi, Fitoor Capital · AletheiaAI Glossary
Definition
Term Loan is a fixed-amount loan with a defined tenure and repayment schedule — typically used for specific large purchases or refinancing. Revolving Credit is a credit facility that the borrower can draw down, repay, and re-draw up to a defined limit — typically used for working capital flexibility.
India Context
Indian startup financing in 2026 includes both. Venture debt (Trifecta, Stride, InnoVen) typically structures as term loans tied to specific milestones. SME credit lines (HDFC Bank, ICICI, Axis) typically structure as revolving working capital facilities.
Example
A Series A SaaS raises ₹40Cr equity. Additionally, the company takes ₹10Cr venture debt as a term loan (5-year tenure, 13% interest) for product expansion. Separately, the company maintains a ₹5Cr revolving working capital line from HDFC Bank for monthly cash flow flexibility.
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