What it covers
Amount, pricing, fees, term, repayment profile, security, guarantees, covenants and conditions before drawdown. It may also set exclusivity and who pays legal costs if the deal does not complete.
The terms that matter most
Headline rate gets the attention, but covenants, security and personal guarantees often matter more. A slightly higher rate with lighter covenants can be the better deal.
Check conditions precedent carefully. Each one is a step that can delay or derail drawdown.
Negotiate now, not later
Once a term sheet is signed, the lender's lawyers draft the facility agreement around it. Changing major terms after that point is slow and sometimes impossible.
Frequently asked questions
Is a term sheet legally binding?
Usually only parts, such as confidentiality, exclusivity and cost provisions.
Should I compare several term sheets?
Yes. Comparing offers side by side is the best way to see what is negotiable.
Last reviewed: 2026-10-06