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GLOSSARYTERMS AS A CREDIT DESK USES THEM

Term loan B (TLB)

What is a term loan B, and how does it differ from a bank term loan?

ONE OF 366 TERMS · FREE · NO SIGNUP

BY MICHAEL SHANG · SIXTEEN YEARS IN COMMERCIAL BANKING · UPDATED

// THE SHORT ANSWER

A term loan B is a tranche of a leveraged loan sold mainly to institutional investors, such as collateralised loan obligation funds, rather than held by banks. It has little scheduled amortisation, in the US market often 1% a year, and is repaid mostly at maturity, which is usually later than that of any bank-held, amortising term loan A in the same deal. Its documents are often covenant-lite, it trades in a secondary market, and its holders vote on amendments like any lender, so a borrower with a TLB deals with a changing group of investors rather than a few banks it knows.

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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