Construction Loan Financing Term Sheet

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I. Introduction

This Construction Loan Financing Term Sheet outlines the basic terms and conditions for a Construction Loan Financing agreement between [Your Company Name] and the borrower, [Borrower Name]. The purpose of this term sheet is to provide a framework for negotiations and to ensure clarity on the key terms of the financing arrangement.

II. Loan Amount and Purpose

• Loan Amount: The principal amount of the loan shall be $5,000,000.

• Purpose: The loan proceeds will be used exclusively for the construction of [Project Name], located at [Project Address].

III. Term and Repayment

• Term: The term of the loan shall be 36 months from the date of closing.

• Interest Rate: The interest rate shall be 6.5% per annum, calculated on a simple basis.

• Repayment Schedule: Repayment of the principal amount and interest shall commence 6 months after the date of closing, with monthly payments thereafter.

IV. Security and Guarantees

• Security: The loan shall be secured by a priority mortgage on the property being constructed, along with any other collateral deemed necessary by [Your Company Name].

• Guarantees: John Smith, CEO of [Borrower Name], shall provide a personal guarantee for the loan.

V. Conditions Precedent

• Due Diligence: Completion of satisfactory due diligence by [Your Company Name] on the borrower and the project.

• Insurance: The borrower shall obtain and maintain adequate insurance coverage for the construction project, with [Your Company Name] listed as a loss payee.

VI. Fees and Expenses

• Origination Fee: An origination fee of 2% of the loan amount shall be payable to [Your Company Name] upon closing.

• Legal and Closing Costs: The borrower shall bear all legal and closing costs associated with the loan transaction.

VII. Covenants and Defaults

• Covenants: The borrower shall comply with all applicable laws and regulations and provide regular updates on the progress of the construction project.

• Defaults: Events of default shall include but not be limited to non-payment of principal or interest, material breach of loan covenants, and insolvency of the borrower.

VIII. Miscellaneous

• Governing Law: This agreement shall be governed by the laws of [Jurisdiction].

• Amendments: Any amendments to this term sheet shall be in writing and signed by both parties.

• Confidentiality: The terms of this term sheet are confidential and may not be disclosed to any third party without the prior written consent of both parties.

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