What type of loan is referred to as an interim loan?

An interim loan is commonly understood as a short-term financing option that provides funds to cover the period before a long-term financing solution is in place. Construction loans are a prime example of interim loans, as they are specifically designed to provide the necessary financing for the construction of a new home or building.

These loans typically have a term that lasts until the construction is completed and the property is ready for occupancy or is transitioned to a permanent mortgage. During this time, the borrower may only be required to pay interest on the amounts drawn down, which is characteristic of how construction loans function. Given this context, B is the correct choice for identifying an interim loan.