Shorter term loans would be more liquid because if someone is holding a loan token they would be able to redeem the loan token for TUSD in a shorter time period. Pool participants would prefer to hold loan tokens which are redeemable in 14 days or a month as compared to holding a loan token for a year.
This is one of the ideas behind encouraging shorter terms, other motive is to build a track record of repayments to generate confidence in our protocol.