A term sheet in plain English
A term sheet is a short written summary of the main terms a lender is offering for a loan. It comes before the formal loan documents. Its job is to make sure you and the lender agree on the deal: how much, for how long, secured over what, how interest is handled, what it will cost and what has to happen before funds are released.
At Equity Tap, once we have your scenario, we can often give conditional approval on the phone and issue a term sheet in about 30 minutes. That gives you something concrete in writing on the same day, so you can make a decision and keep moving.
What's in an Equity Tap term sheet
| Item | What it tells you |
|---|---|
| Borrower and guarantors | Who is borrowing and who is guaranteeing the loan |
| Loan amount | The total loan, and the net advance you actually receive |
| Term | How long the loan runs, from one month to twelve months |
| Security | The property and whether it's a first mortgage, second mortgage or caveat |
| Purpose | The business purpose of the loan |
| Interest arrangement | Interest only, or interest for up to six months prepaid or added to the loan |
| Full cost | Interest and all costs, set out so you can see the total |
| Exit | How the loan is expected to be repaid |
| Conditions | What's needed before funding, such as ID, property and mortgage details, and exit evidence |
Term sheet vs loan documents
The term sheet is the summary. The loan documents are the full legal contract that follows. If you're happy with the term sheet, you sign it and provide the items it lists. Then loan documents are prepared to reflect what was agreed. The point of the term sheet is that nothing in the final documents should come as a surprise, because the key terms were already laid out.
Why a fast term sheet matters
When you need money for a deadline, the worst outcome is weeks of waiting for an answer that turns out to be no, or yes for less than you need. A term sheet issued quickly means you know where you stand:
- You can tell your supplier, vendor or the ATO that funds are coming
- You can compare it against any other option you have
- Your broker or accountant can review it the same day
- You can plan your exit around a known term and cost
How we can issue one in about 30 minutes
Speed comes from how we lend. We're a direct lender with no credit committee, so the person you talk to is often the person who decides. We don't order a valuation before approval, and we don't need tax returns, BAS, profit and loss, an accountant's letter or bank statements for a property-secured loan. There's no credit check at initial assessment. That means the scenario can be assessed on the call.
What we need to issue a term sheet:
- How much you need, and for how long
- The security property and any existing mortgage on it
- What the money is for
- How you'll repay it
- Who is borrowing and who the guarantors are
What to check when you read a term sheet
- The net advance. If interest is prepaid or costs are deducted, the money you receive will be less than the loan amount. Make sure it covers what you need. See how prepaid interest works.
- The total repayable. What you'll owe at the end of the term, especially if interest is added to the loan.
- The term. Does it match your exit, with sensible room?
- The security. Which property, and in what position.
- The conditions. What you need to provide, and by when.
We're an ethical lender. Before you proceed, we make sure you fully understand the loan, the costs and the exit. If anything in the term sheet isn't clear, ask. We'd rather explain it twice than have you sign something you're unsure about.
For example
For example, a business owner calls at lunchtime needing funds to pay a tax debt, secured over a commercial unit with a small first mortgage. After a short conversation about the amount, the unit, the existing loan and the plan to refinance in four months, a term sheet arrives that afternoon setting out the loan, the four-month term, the second mortgage security, interest added to the loan, the full cost and the conditions. The owner reviews it with their accountant and signs that evening.
Is a term sheet an approval?
A term sheet reflects a conditional approval. Final approval depends on the conditions being met, such as ID and property details checking out and the exit evidence lining up. A credit check may be made before funding. Once conditions are met, eligible loans can settle in as little as 24 hours.
Get a term sheet today
Each loan is priced on your individual circumstances, aiming for the sharpest rate available for your situation, and the full cost is shown on the term sheet before you proceed. Call 1300 123 024 or apply online. Brokers can follow our scenario checklist.
Business-purpose lending only. Approval, timing and terms depend on the scenario.
Frequently asked questions
What is a term sheet for a business loan?
How quickly does Equity Tap issue a term sheet?
Is a term sheet a guarantee of approval?
Does the term sheet show the full cost?
What's the difference between the loan amount and the net advance?
Do I need financials to get a term sheet?
Can my accountant or broker review the term sheet?
Brokers: send the scenario through the Equity Tap broker channel and you will deal with the same lending team.