How does a business term loan work?

A term loan provides a fixed lump sum that you repay in equal installments over a set period (typically 1-10 years) at a fixed or variable interest rate. Short-term loans (under 2 years) fund working capital and immediate needs; long-term loans (5-10 years) fund major assets or expansions. Each payment covers interest plus principal, with early payments being mostly interest (amortization).