Debt Financing Term Sheet
Debt Financing Term Sheet
I. Introduction
This Term Sheet outlines the principal terms under which [Investor Name] proposes to provide debt financing to [Your Company Name].
This document serves as a framework for further negotiation and documentation. It is not legally binding except for the terms regarding confidentiality and exclusivity. The completion of the transaction is subject to due diligence, legal review, and negotiation of definitive agreements.
II. Loan Amount and Disbursement
[Your Company Name] is seeking a loan amount of [$ Loan Amount] to finance [describe the specific project or requirement]. The funds will be disbursed as follows:
-
An initial disbursement of 30% upon signing of the definitive agreement.
-
Subsequent disbursements totaling 70% upon achievement of specified milestones agreed upon by both parties.
III. Interest Rate and Repayment Terms
The loan shall bear an interest rate of [X%] per annum, calculated on a 360-day year basis and payable monthly in arrears. Repayment terms are as follows:
-
Interest-only payments for the first 12 months following the disbursement of the loan.
-
Amortization of principal and interest commencing after 12 months and continuing until the maturity date of the loan, which shall be 5 years from the date of the initial disbursement.
IV. Covenants and Conditions
[Your Company Name] agrees to comply with the following covenants:
-
Maintain a minimum cash balance of [$ Specific Amount].
-
Obtain prior written consent from [Investor Name] for additional indebtedness.
-
Provide quarterly financial statements within 30 days following the end of each quarter.
The loan is also subject to achieving certain operational and financial milestones as detailed in the definitive agreements.
V. Security and Guarantees
The loan will be secured by the following:
-
Physical Assets:
Machinery and Equipment:
List of Machinery and Equipment:
-
Machine A: Market value of $50,000, no outstanding loans or liens.
-
Machine B: Market value of $30,000, outstanding loan of $10,000.
-
Machine C: Market value of $70,000, no outstanding loans or liens.
Real Estate:
Property A:
-
Location: [Address]
-
Size: [Square footage/acreage]
-
Current Market Value: $[Value]
-
Mortgages or Liens: None
Property B:
-
Location: [Address]
-
Size: [Square footage/acreage]
-
Current Market Value: $[Value]
-
Mortgages or Liens: Mortgage of $[Amount]
Inventory:
-
Type of Inventory: [Description]
-
Quantity: [Number of units]
-
Current Value: $[Value]
-
Expiry Date (if applicable): [Date]
-
Corporate Guarantees: Guarantees by parent or affiliated companies, if applicable.
VI. Conditions Precedent and Due Diligence
Completion of the financing is subject to satisfactory due diligence conducted by [Investor Name] within 45 days from the date of this Term Sheet. The transaction is contingent upon the negotiation and execution of definitive agreements that fully reflect the terms and conditions described herein.
VII. Signatories
This Term Sheet is subject to the approval and execution by authorized representatives of both parties.
[Your Name]
[Investor's Representative Name]
VIII. Governing Law and Jurisdiction
This agreement shall be governed by and construed in accordance with the laws of [Jurisdiction]. Any dispute arising out of or in connection with this agreement shall be submitted to the exclusive jurisdiction of the courts of [Jurisdiction].
