A term sheet is the point where a conversation becomes a commitment of time and money on both sides. This entry explains what happens from that point to funding, and then how a loan is serviced until it is repaid. The mechanics apply broadly across private credit; where we describe Caldrion specifically, we say so.
The term sheet
If there is a fit, we sign an NDA promptly, work through the questions that matter and propose terms approved by our investment committee, which meets weekly. A term sheet from Caldrion is backed by capital on hand, not by capital we still have to find, and we do not issue a term sheet we do not intend to honor.
A term sheet in private credit usually covers:
- Parties and structure: borrower, guarantors, any special-purpose entity requirements.
- Amount and funding: the commitment, how much funds at closing and any future funding for construction, renovation or a revolver.
- Pricing: our published range is SOFR + 600–900 bps, or a fixed-rate equivalent, plus an origination fee of 1–2%. Floors and other fees are set loan by loan. See pricing, fees and OID.
- Term and extensions: our terms are 12–36 months, with extension options, usually subject to tests. See amortization, call protection, PIK and interest reserves.
- Collateral and guarantees: what secures the loan and who stands behind it. See collateral, security and guarantees.
- Covenants and reporting: see covenants explained and, for ABL, the borrowing base explained.
- Conditions: the diligence and documents required before funding.
- Expenses and deposit: lenders commonly ask the borrower to fund third-party costs (appraisal, legal, field exam) as they are incurred, and term sheets typically say what happens to those costs if the loan does not close.
Most term sheets are non-binding on the economic terms but binding on confidentiality, expenses and, where agreed, exclusivity. We do not ask for exclusivity before we have a genuine interest. For a full anatomy of loan documents, see loan terms and documentation.
Confirmatory diligence
Diligence after the term sheet is confirmatory: it tests the facts the terms were based on. It is focused on the collateral and the plan. Depending on the asset, expect:
| Collateral | Typical third-party and lender work |
|---|---|
| Real estate | Appraisal, property condition report, environmental site assessment, title and survey, zoning review, budget and schedule review, site visit |
| Construction | All of the above plus a construction consultant review of plans, contracts, budget and draw process |
| Receivables, inventory, equipment | Field examination, inventory and equipment appraisals, review of reporting systems |
| Portfolios and loan pools | Asset-level review, valuation testing, loan tape and file sampling |
| Royalties and contracts | Review of the underlying agreements, payment history and counterparty |
| Every loan | Background checks on principals, corporate and legal structure, lien searches, insurance review |
Because Caldrion also owns and operates real assets, we review budgets, schedules and leasing assumptions as an owner would. More on this in collateral valuation and diligence.
Documentation
Documentation is prepared by counsel. The core set usually includes a loan or credit agreement, a promissory note, security documents (a mortgage or deed of trust for real estate, a security agreement and UCC financing statements for personal property, account control agreements for deposit accounts), guarantees, and, where there is other debt, an intercreditor agreement. Construction loans add a building loan agreement or similar draw provisions, assignments of contracts and plans, and contractor consents.
The fastest documentation processes share three features: the term sheet was detailed enough that few business points remain open, the borrower’s counsel engages early, and organizational documents, existing loan payoffs and insurance certificates are gathered in parallel rather than at the end.
Closing checklist
An illustrative list of what typically has to be in place before funding:
- Executed loan documents, guarantees and any intercreditor agreement
- Organizational documents, good standing certificates and authorizing resolutions
- Title policy (real estate) or lien search results and filed UCC financing statements (personal property)
- Insurance certificates naming the lender as required
- Account control agreements for any controlled accounts
- Payoff letters for any debt being refinanced
- Third-party reports in final form
- Legal opinions where required
- Funds flow memo agreed by all parties
Funding
We lend from our own balance sheet. There is no buyer to find and no position to sell down before closing. On the closing date, funds move according to the agreed funds flow: payoffs, purchase price, reserves, fees and costs.
Servicing
“The team that underwrites the loan is the team that services it.” We service every loan directly. What servicing involves depends on the loan:
| Loan type | What servicing usually involves |
|---|---|
| Bridge and construction | Monthly or quarterly operating reports, draw requests with inspection and lien waivers, reserve administration |
| Asset-based | Borrowing base certificates, collateral reporting, periodic field exams, cash management through controlled accounts |
| NAV and lender finance | Portfolio or pool reporting, covenant tests, eligibility reviews |
| Royalty and contract | Collection account reconciliation, performance against the underwriting case |
Draws and future funding
For loans with future funding, draws are released as value is created. A draw request typically includes invoices, a contractor’s application for payment, lien waivers and an inspection. Clean, complete draw packages are the most effective way to keep a project on schedule.
Extensions
Extension options usually depend on conditions such as no default, a minimum debt yield or coverage level and payment of an extension fee. Because we lend our own permanent capital, we can evaluate an extension on its merits rather than against a calendar. If a sound plan needs more time, talk to us early.
When plans change
Business plans rarely run exactly to schedule. The earlier a borrower tells us about a delay, a cost overrun or a lost tenant, the more options there are. See workouts and enforcement for how we approach those conversations.
Related
The chapter overview working with Caldrion, how to request a loan, our process page and case studies such as Project Juniper and Project Orchard.
This entry is general information as of November 2026, not investment, legal or tax advice, and not an offer of securities.