diff --git a/erpnext/loan_management/doctype/loan/loan.js b/erpnext/loan_management/doctype/loan/loan.js
index 940a1bbc000..38328e69674 100644
--- a/erpnext/loan_management/doctype/loan/loan.js
+++ b/erpnext/loan_management/doctype/loan/loan.js
@@ -93,6 +93,12 @@ frappe.ui.form.on('Loan', {
 					frm.trigger("make_loan_refund");
 				},__('Create'));
 			}
+
+			if (frm.doc.status == "Loan Closure Requested" && frm.doc.is_term_loan && !frm.doc.is_secured_loan) {
+				frm.add_custom_button(__('Close Loan'), function() {
+					frm.trigger("close_unsecured_term_loan");
+				},__('Status'));
+			}
 		}
 		frm.trigger("toggle_fields");
 	},
@@ -174,6 +180,18 @@ frappe.ui.form.on('Loan', {
 		})
 	},
 
+	close_unsecured_term_loan: function(frm) {
+		frappe.call({
+			args: {
+				"loan": frm.doc.name
+			},
+			method: "erpnext.loan_management.doctype.loan.loan.close_unsecured_term_loan",
+			callback: function () {
+				frm.refresh();
+			}
+		})
+	},
+
 	request_loan_closure: function(frm) {
 		frappe.confirm(__("Do you really want to close this loan"),
 			function() {
diff --git a/erpnext/loan_management/doctype/loan/loan.py b/erpnext/loan_management/doctype/loan/loan.py
index 7b7fc17142c..b66b8519238 100644
--- a/erpnext/loan_management/doctype/loan/loan.py
+++ b/erpnext/loan_management/doctype/loan/loan.py
@@ -335,6 +335,22 @@ def get_loan_application(loan_application):
 		return loan.as_dict()
 
 
+@frappe.whitelist()
+def close_unsecured_term_loan(loan):
+	loan_details = frappe.db.get_value(
+		"Loan", {"name": loan}, ["status", "is_term_loan", "is_secured_loan"], as_dict=1
+	)
+
+	if (
+		loan_details.status == "Loan Closure Requested"
+		and loan_details.is_term_loan
+		and not loan_details.is_secured_loan
+	):
+		frappe.db.set_value("Loan", loan, "status", "Closed")
+	else:
+		frappe.throw(_("Cannot close this loan until full repayment"))
+
+
 def close_loan(loan, total_amount_paid):
 	frappe.db.set_value("Loan", loan, "total_amount_paid", total_amount_paid)
 	frappe.db.set_value("Loan", loan, "status", "Closed")