Also referred to as a Term B Loan or an institutional term loan. A term loan made by institutional investors (such as CLOs, debt funds, pension funds, and insurance companies) instead of by banks. One of the primary goals of an institutional investor is maximizing the long-term return on their investment. TLBs typically mature after six to seven years with a bullet repayment on the maturity date (although sometimes there may be nominal amortisation of the debt before a final bullet repayment).

TLBs may provide that the Term B lenders have the right not to accept prepayments of the loans. Prepayment of the loans may also be subject to a prepayment penalty if repaid within the first few years. Interest rate margins on TLBs are typically higher than the interest rate margin on the initial Term Loan A (TLA) and any revolving credit loan under the same loan agreement.

In US law-governed loan transactions, TLBs are senior debt and are usually not subordinated to other indebtedness of the borrower.