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GLOSSARYTERMS AS A CREDIT DESK USES THEM

Tail (term loan)

What is the tail on a term loan, and why do lenders want one?

ONE OF 209 TERMS · FREE · NO SIGNUP

BY MICHAEL SHANG · SIXTEEN YEARS IN COMMERCIAL BANKING · UPDATED

// THE SHORT ANSWER

The tail is the gap between the date a loan must be repaid and the date the cash flows that repay it end: the remaining term of a contract, a lease, a concession or the useful life of an asset. A lender wants the loan to mature well before that cash stops, so that a slow year or a delay can be absorbed by extending the loan rather than by a default. A loan that runs to the last year of the contract it relies on has no tail, and any slippage leaves nothing to repay it from.

BASIS  Practitioner judgment from sixteen years in commercial banking, set out in How Bankers Think (Highbank Press, 2026). Every borrower on this site is a composite constructed for teaching, not a client. The market is mid-market commercial lending as practised in New Zealand and Australia; where a convention differs elsewhere, the page says so.

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