Tenor
What is the tenor of a loan, and how does a lender choose it?
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BY MICHAEL SHANG · SIXTEEN YEARS IN COMMERCIAL BANKING · UPDATED
// THE SHORT ANSWER
The tenor is the length of a facility — the time until it must be repaid or renewed. A lender matches it to what is being financed and how it repays: a working capital line on a twelve-month review, an equipment loan over the working life of the equipment, a trade loan to the length of the trade cycle. A tenor longer than the asset's useful life lends against something that will be gone before the loan is, and one shorter than the repayment capacity builds a refinancing into the structure.
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.
// WORKED IN
// NEXT TO IT
- Working capital facility
- Multi-currency facility
- Clean-down
- Self-liquidating
- Balloon payment
- Amortisation
- Hardcore (overdraft)
- Term-out
- Club facility
- Unsecured lending
- Cash sweep
- Finance lease
- Drawdown
- Interest-only period
- Utilisation
- Bullet repayment
- Seasonal facility
- Syndicated loan
- Maturity extension (amend and extend)
- Mezzanine finance
- Refinancing risk
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