Indicative terms

Indicative terms are a lender's preliminary view of what a facility might look like based on the information reviewed to date, expressly not a firm commitment and subject to further verification, valuation and credit assessment before anything is confirmed. They are useful early in a process for comparing lenders and shaping expectations, but should not be treated as a guarantee that the final approval will match, since a valuation coming in below expectation, a change in the borrower's financial position, or a detail uncovered during due diligence can all alter the terms ultimately offered. Reputable lenders issue indicative terms based on a genuine read of the file rather than an artificially attractive figure designed purely to win the mandate, and a broker's role includes steering borrowers toward lenders whose indicative terms tend to hold up through to formal approval. Borrowers should ask what specifically remains to be verified before indicative terms become firm, so expectations are set accurately from the outset.

Related

Term sheet · Credit approval · Conditions precedent