Term Sheet for Bank Loan
I. Introduction
This Term Sheet outlines the proposed terms and conditions under which [YOUR COMPANY NAME] will provide a loan to [BORROWER'S NAME]. It is intended to serve as a preliminary agreement pending a detailed legal and financial due diligence process. This document is confidential and solely for the use of the parties involved.
II. Loan Details
The principal details of the loan are as follows:
Principal Amount: [LOAN AMOUNT]
Interest Rate: [INTEREST RATE] per annum
Loan Disbursement Date: [DISBURSEMENT DATE]
Repayment Terms: [REPAYMENT TERMS]
Maturity Date: [MATURITY DATE]
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:
Intended Use: [SPECIFIC USE OF THE LOAN FUNDS]. 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.
IV. Warranties and Representations
[YOUR COMPANY NAME] and [BORROWER'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: [SPECIFIED PERIODS]
Maintenance of minimum financial ratios: [REQUIRED RATIOS]
Immediate reporting of any material changes affecting the borrower’s financial standing.
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 [BORROWER'S NAME]:
Completion of all necessary legal documentation and approvals.
Satisfactory completion of due diligence by [YOUR COMPANY NAME].
Approval of the loan by [YOUR COMPANY NAME'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.
[YOUR COMPANY NAME]
[DATE SIGNED]
[BORROWER'S NAME]
[DATE SIGNED]
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