Glossary
Term sheet
A lender's written outline of the facility it is prepared to offer, ahead of formal approval.
In plain English
A term sheet sets out the shape of a proposed facility: amount, rate, term, security, covenants, fees and the conditions that have to be satisfied. It usually follows an initial credit view and precedes formal approval and documents.
It is generally indicative rather than binding, and almost always subject to conditions: valuation, further information, final credit sign-off.
Why a lender cares
Read the covenants and the conditions before the rate. The rate is the part everyone compares and the covenants are the part that governs how the business is run for the next several years. A slightly higher rate with a leverage ceiling you can live inside is usually the better facility.
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