The difference between term loan and debentures :
- Debentures provide more flexibility than term-loans as they offer greater variety of choices with respect to maturity, interest rate, security, repayment and other special features,
- Before the issue, the company enjoys greater flexibility in designing the debenture issue whereas after the issue, the company hardly has any freedom in re-negotiating the terms of the issue. In case of term-loan the flexibility is less before taking the loan and more freedom is enjoyed in re-negotiating the terms of the loan contract after taking the loan.
- In case of debenture, the firm deals with numerous investors and in case of a term loan, a firm has to deal with one or few FIs.