Identify three conditions in which term loan financing is particularly appropriate
Three conditions in which a term loan is appropriate are:
(1) to finance an asset of intermediate-term life, thus hedging the loan with the cash thrown off by the asset,
(2) as a substitute for a line of credit in a firm with an operating cycle longer than one year, and
(3) as a “bridge loan” to finance the company during a period when its needs are uncertain or financial market conditions make it difficult or expensive to obtain longer-term financing.