What defines a major difference between Term Loan B and senior debt?

Term Loan B is characterized by its lower amortization requirements compared to traditional senior debt. Typically, Term Loan B features minimal or no principal amortization in the initial years of the loan, meaning that borrowers are required to pay back very little of the principal during this time. Instead, these loans often culminate in a larger balloon payment at maturity, allowing companies to preserve cash flow for operational needs instead of directing it toward debt service.

This structure contrasts with most senior debt agreements, which often have more regular amortization schedules where principal payments are made systematically over the life of the loan. The design of Term Loan B is intentional, given the target borrower's profile—often leveraged entities that may prioritize cash flow retention in the initial term to invest in growth or reduce leverage.

While other options touch on different aspects of loans, they do not accurately capture the defining characteristic of Term Loan B compared to other types of senior debt, specifically in terms of amortization structure.