Business Loan Term Sheet for the United Kingdom

Business Loan Term Sheet Template for England and Wales

A Business Loan Term Sheet is a preliminary document that outlines the key commercial and legal terms of a proposed business loan under English and Welsh law. It serves as a foundation for the subsequent preparation of detailed loan documentation and typically includes essential terms such as loan amount, interest rate, repayment terms, security requirements, and key conditions. While usually non-binding (except for certain provisions like confidentiality), it represents the parties' intentions and forms the basis for negotiating the final loan agreement.

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What is a Business Loan Term Sheet?

The Business Loan Term Sheet is a crucial preliminary document used in commercial lending transactions under English and Welsh law. It is typically prepared after initial commercial discussions but before detailed legal documentation. The document captures the essential commercial terms agreed between the lender and borrower, including facility amount, purpose, interest rate, repayment terms, and any security arrangements. While predominantly non-binding, the Business Loan Term Sheet serves as a roadmap for lawyers drafting the full loan documentation and helps ensure all parties have a clear understanding of the proposed transaction structure.

What sections should be included in a Business Loan Term Sheet?

1. Parties: Details of lender and borrower including full legal names and registration details

2. Facility Amount: Principal amount of the loan and currency

3. Purpose: Intended use of loan proceeds and any restrictions on use

4. Interest Rate: Applicable interest rate, calculation basis, and payment frequency

5. Term: Duration of the loan and maturity date

6. Repayment Terms: Schedule and method of repayment including any amortization details

What sections are optional to include in a Business Loan Term Sheet?

1. Security: Details of any collateral, security interests, or guarantees required for the loan

2. Conditions Precedent: Conditions that must be satisfied before loan drawdown including required documentation

3. Financial Covenants: Financial metrics and ratios that the borrower must maintain throughout the loan term

4. Fees: Any arrangement fees, commitment fees, or other charges applicable to the loan

5. Events of Default: Circumstances that would trigger default and lender's remedies

What schedules should be included in a Business Loan Term Sheet?

1. Form of Drawdown Notice: Template form for requesting loan disbursement

2. Repayment Schedule: Detailed schedule showing payment dates and amounts

3. Security Details: Comprehensive list and description of security assets and their valuation

4. Fee Schedule: Detailed breakdown of all applicable fees and charges

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

England and Wales

Publisher

Genie AI

Document Type

Finance Agreement

Cost

Free to use
Industries

Financial Services and Markets Act 2000: Primary legislation governing financial services regulation in the UK, including business lending activities and regulatory framework

Consumer Credit Act 1974: Legislation that may apply when lending to small businesses, providing consumer protection measures and regulatory requirements

Companies Act 2006: Core legislation governing corporate entities in the UK, relevant for corporate borrowers and their capacity to borrow

Law of Property Act 1925: Fundamental legislation concerning real property and security interests over real estate assets

FCA Handbook: Regulatory guidelines and requirements for FCA-regulated lenders, including conduct of business rules

Financial Services and Markets Act 2000 (Regulated Activities) Order 2001: Specifies which activities require FCA authorization, including certain lending activities

Money Laundering Regulations 2017: Anti-money laundering requirements applicable to financial transactions and business relationships

Unfair Contract Terms Act 1977: Legislation controlling unfair terms in contracts, particularly important for standard form business contracts

Misrepresentation Act 1967: Governs false or misleading statements made during contract formation

Enterprise Act 2002: Legislation affecting business restructuring and enforcement of security

Insolvency Act 1986: Key legislation governing corporate insolvency and restructuring procedures

Financial Collateral Arrangements (No.2) Regulations 2003: Regulations governing financial collateral arrangements and security interests

Banking Act 2009: Legislation regulating banking services and financial stability measures

Small Business, Enterprise and Employment Act 2015: Legislation aimed at supporting small businesses, including measures affecting business finance

Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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