Delayed Draw Term Loan

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DEFINITION of 'Delayed Draw Term Loan'

A special feature in a term loan that stipulates that the borrower can withdraw predefined amounts of the total pre-approved amount of a term loan at contractual times. This special type of term loan is only offered to individuals and firms that meet and maintain certain contractual requirements and have outstanding credit ratings.

BREAKING DOWN 'Delayed Draw Term Loan'

There are different types of contractual caveats the borrower must meet, such as maintaining a certain level of cash on hand or maintaining a minimum quick ratio factor. Any contractual obligations will limit the borrower from performing some particular acts, such as over leveraging, but they are still considered a flexible feature for a term loan.

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RELATED FAQS
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    Discretionary income is the money left over from your gross income each month after taking out taxes and paying for necessities. ... Read Full Answer >>
  2. When capitalizing interest, will interest accrue while you are in a deferment?

    When capitalizing interest, interest accrues while a person is in a deferment of his loan. In the event of a deferment, the ... Read Full Answer >>
  3. Why is more interest paid over the life of a loan when it is capitalized?

    More interest is paid over the life of a loan when that interest is capitalized because the capitalized interest is added ... Read Full Answer >>
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    Two good examples of simple interest loans are simple interest car loans and the interest owed on lines of credit such as ... Read Full Answer >>
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    Simple interest is most commonly seen in short-term loans, such as those from payday lenders or pawn shops. You might see ... Read Full Answer >>
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