Document background
The Credit Facility Term Sheet is a crucial document used in the initial stages of commercial lending transactions in Canada. It serves as a bridge between preliminary discussions and the final credit agreement, setting out the material terms and conditions of the proposed facility. This document is typically used when parties have reached commercial agreement on key terms but before investing in full transaction documentation. It includes essential information about the credit facility, including amount, purpose, interest rates, security requirements, and key covenants, while ensuring compliance with Canadian federal banking regulations and provincial security laws. The term sheet often forms the basis for obtaining credit committee approval and, while usually non-binding except for certain provisions, represents a moral commitment between the parties to proceed on the specified terms.
