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Definition: Stretch Loan
A loan that is offered to another party, which can be an individual or subsidiary company, which will require a large part of the party's cash flows to pay back the loan on a monthly basis. This is approximately 50% or higher of the company’s revenues.
Stretch loans are given to those individuals or companies that are in grim need of financing. Due to the nature of the loan and relatively higher default and financial risk, lenders may require large collateral or a huge initial down payment for extending these stretch loans.