Loan structures guide
Understand the structure behind the headline terms
Facility size and pricing are only part of an offer. Draw mechanics, repayment, fees, collateral, and flexibility determine how financing works in practice.
Start with proceeds
Commitment, draw, and net cash are different numbers
Understanding the cash available at closing prevents a stated facility size from being confused with usable proceeds.
01
Commitment
The maximum facility amount, subject to the agreement, availability conditions, and any borrowing-base limits.
02
Initial draw
The amount funded at closing, which may be less than the full commitment.
03
Net proceeds
The cash remaining after required payoffs and applicable closing costs.
Core terms
Know what each part of the offer controls
Review economics, collateral, ongoing obligations, and the conditions that affect access to capital.
Term and amortization
The facility period, maturity date, and schedule used to reduce principal.
Pricing and fees
Fixed or variable pricing together with origination, legal, monitoring, and other applicable charges.
Collateral and guarantees
The assets securing the obligation and the parties responsible for repayment.
Covenants and reporting
Financial tests, operating restrictions, and information the borrower must provide.
Availability
The amount accessible after outstanding draws, reserves, eligibility rules, and other conditions.
Prepayment
The ability to reduce or repay the facility and any associated cost.
Compare consistently
Put competing offers on the same basis
A useful comparison reflects how long capital will be outstanding and how the facility operates after closing.
- Compare actual net proceeds, not only the stated facility amount.
- Use the expected outstanding period when reviewing total cost.
- Compare payment frequency, amortization, maturity, and reuse of principal.
- Account for reporting, collateral, covenant, and prepayment requirements.
Questions to ask
Clarify how the facility behaves after closing
The practical value of a facility depends on access, required payments, ongoing conditions, and exit flexibility.
How much cash is available?
Confirm the initial draw, required payoffs, costs, and the resulting net proceeds.
What controls future draws?
Understand eligibility, reporting, reserves, covenants, and reuse of repaid principal.
What happens at exit?
Review maturity, prepayment, early-exit costs, and future refinancing options.
Review the economics and the operating fit
Share the financing objective and current obligations. We will evaluate the structure in the context of the business.
Financing is subject to application, underwriting, approval, eligibility requirements, and final documentation.