Term Loan B
Definition
A Term Loan B (TLB) is an institutional leveraged loan — senior secured bank debt syndicated primarily to institutional investors such as CLOs, loan funds, and credit funds rather than held by banks. It is the workhorse financing instrument of LBOs.
Typical features: floating-rate pricing at SOFR plus a spread (often a few hundred basis points, sometimes with a SOFR floor), roughly 5–7 year maturity, minimal amortization (commonly 1% per year with a bullet at maturity), first-lien security, and — in the modern market — usually covenant-lite (no financial maintenance covenants). Prepayable, often with brief soft-call protection (e.g., 101 for six months) rather than hard call protection.
This contrasts with a Term Loan A, which is held by banks, amortizes more heavily, has a shorter tenor, and usually carries maintenance covenants alongside the revolver.
Why interviewers ask
Leveraged finance interviews expect you to lay out an LBO capital structure — revolver, TLB, secured/unsecured notes — and describe each layer's pricing, tenor, and covenants. TLB versus TLA and TLB versus high-yield bonds are standard compare-and-contrast questions.
Related terms
Interviews don't test definitions — they test recall under pressure.
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