What process involves extending the term of an existing commercial loan?

The process of extending the term of an existing commercial loan is best described as a renewal. During a renewal, a borrower typically enters into a new loan agreement to replace the existing loan, which includes extending the repayment timeline. This process allows the borrower to continue accessing funds under similar or revised terms, often reflecting changes in the market or financial circumstances.

In contrast, modification typically refers to adjusting the terms of the current loan without replacing it, such as changing the interest rate or payment schedule, rather than simply extending the term. A short-term extension specifically refers to prolonging the loan for a brief period rather than executing a full renewal or a longer-term commitment. Lastly, a covenant update relates to adjusting the conditions or requirements in the loan agreement but doesn’t inherently involve extending the loan's duration. Thus, the concept of renewal aligns directly with the act of extending the term of a commercial loan in a comprehensive manner.