May be seen as a memorandum of understanding, setting out the terms and conditions of a financing which will in due course be incorporated into a full loan agreement. Term sheets may be “uncommitted” or “committed”. The former will normally be subject to:
- lender credit committee approval;
- formal loan documentation (i.e. contract);
- satisfactory completion of due diligence investigations.
Committed term sheets will have met the requirements of the first bullet point above but still be subject to the other two.