05Decide
Term sheet template
Eight clauses decide the true cost of a commercial loan.
Facility and purpose
Loan type, amount, and the transaction it funds.
Security
First charge, general security agreement, assignment of rents and leases.
Rate and term
Fixed or floating basis, benchmark, spread, and term length.
Amortization
Years used to size payments, independent of term.
Covenants
Minimum DSCR, maximum LTV, reporting cadence.
Prepayment
Open, closed, yield maintenance, or defeasance.
Conditions precedent
Appraisal, environmental, survey, estoppels, insurance.
Fees
Commitment, standby, legal, and broker fees.
Questions
Is a term sheet binding?
Generally no, except for confidentiality, expenses, and exclusivity clauses. Read those three closely.
How long does a term sheet stay open?
Most Canadian commercial term sheets expire in 10 to 30 days unless the deposit is paid.