Bank Term Sheet

I. Introduction

This Bank Loan Term Sheet Template is designed to outline the proposed terms and conditions under which [BANK NAME] (the "Lender") will consider providing a loan to [YOUR COMPANY NAME] (the "Borrower"). This document is intended to serve as a preliminary understanding before detailed loan documentation is drafted. Please review this template thoroughly and consult with legal counsel to ensure that it meets all the requirements specific to your company’s needs and compliance obligations.

It is crucial for [YOUR COMPANY NAME] to provide accurate and comprehensive information to facilitate a well-informed and equitable loan agreement. The terms presented are negotiable and are intended to form the basis for further discussion and negotiation of the final loan agreement.

II. Loan Details

The principal details of the loan are as follows:

• Principal Amount: $500,000

• Interest Rate: 5.25% per annum

• Loan Disbursement Date: April 30, 2024

• Repayment Terms: Monthly installments of $10,500 starting from May 31, with a final balloon payment of $200,000 due on April 30.

• Maturity Date: April 30, 2029

This section of the Term Sheet establishes the fundamental characteristics of the loan. The interest rate defined is fixed and will govern the accrual of interest on the principal loan amount throughout the loan. The repayment terms detail the initial date when repayment will begin and include any provisions for amortization or balloon payments.

III. Purpose of the Loan

The loan procured under this agreement is exclusively for the purpose described below:

To fund the expansion of manufacturing facilities and purchase new equipment necessary to meet increased demand for our flagship product. Funds will be allocated strictly as per the outlined intentions to prevent any breach of contract, ensuring that both parties uphold the agreement's transparency and trustworthiness. This includes but is not limited to the acquisition of cutting-edge machinery, hiring skilled labor, and securing additional warehouse space to streamline production processes and enhance overall efficiency.

IV. Warranties and Representations

[YOUR COMPANY NAME] and [BANK'S NAME] both warrant that they have the power and authority to enter into this Term Sheet. Each party acknowledges that they are not relying upon any statements or representations not included in this document.

The borrower agrees to maintain a detailed record of expenses paid from the loan to ensure compliance with the loan’s intended use and to support seamless auditing and monitoring of fund utilization.

V. Covenants

The borrower agrees to adhere to the following covenants throughout the term of the loan:

• Periodic financial disclosure: The borrower shall provide comprehensive financial statements, including income statements, balance sheets, and cash flow statements, quarterly, within 30 days of the end of each specified period.

• Maintenance of minimum financial ratios: The borrower shall maintain the following financial ratios at or above the specified thresholds:

  • Debt-to-Equity Ratio: Not to exceed 2:1

  • Current Ratio: Not less than 1.5:1

  • Interest Coverage Ratio: Not less than 3:1

Prompt reporting of any significant changes to the borrower's financial status. The borrower agrees to promptly notify the lender of any material changes in its financial condition, including but not limited to significant increases or decreases in revenue, loss of key contracts, major asset purchases or dispositions, or any adverse legal or regulatory developments.

These covenants are designed to provide continuous oversight and ensure that the borrower maintains a stable financial position adequate to service the loan. Violation of these covenants may lead to remedies including acceleration of repayment.

VI. Conditions Precedent to Disbursement

The disbursement of the loan is subject to the fulfillment of the following conditions by [YOUR COMPANY NAME]:

• Completion of all necessary legal documentation and approvals.

• Satisfactory completion of due diligence by the company.

• Approval of the loan by the company's Board of Directors.

These conditions are intended to safeguard the lending process and ensure that all prerequisites are thoroughly vetted and weighed before the loan is disbursed.

IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first above written.

VII. Signatures

This Term Sheet is subject to the approval and execution by authorized representatives of both parties. By signing below, the parties acknowledge their understanding and acceptance of the terms outlined herein.

[YOUR COMPANY NAME]

[DATE SIGNED]

[BANK'S NAME]

[DATE SIGNED]

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