Definition
A non-binding summary of proposed financing terms.
Why it matters
Review advance rate, fees, term and termination clauses.
Where it shows up in a deal
A term sheet arrives after a funder has seen your aging and a short application, and before full diligence. It is non-binding, conditional on UCC searches, customer credit approval and document review, and it often comes with a diligence deposit that is the first money you actually commit.
What it affects
- Terms can move between the term sheet and the documents, usually after the customer credit review.
- Exclusivity clauses can stop you from talking to other funders while diligence runs.
- A diligence or application fee may be non-refundable even if the file is declined.
- Compare term sheets by modeling the same month of real invoices through each one.
The common mistake
Related terms
- Factoring AgreementThe contract that sets advance rates, fees, recourse terms and duration.
- Discount RateThe fee a factor charges, usually expressed per 30 days or per 10-day increment.
- Advance RateThe percentage of an invoice's value a funder pays upfront.
- Minimum VolumeA contractual minimum amount of invoices a client must factor each month.
Questions about how term sheet affects your facility?
Call (929) 658-8087 or request a written quote — no obligation, no credit impact.
