The next several posts will cover general terms of a venture debt term sheet. Please feel free to ask questions in the comments section below.
Closing Date. The date the legal documents are finalized, conditions precedent have been satisfied. The loan can be funded at this time.
When a company and lender sign a term sheet they should both be focused on closing the transaction. After a term sheet is signed the lender typically has additional due diligence to complete. Full legal documentation is drafted and negotiated. At CLP we take a month to five weeks to complete this. Some lenders and banks may take up to eight weeks and I have seen deals funded in as little as three weeks.
If timing gets tight some of the tasks can be pushed into post-closing which means they are noted in the documentation but settled after the loan has closed and funded. Pushing out the date for these items can help facilitate a closing but may also increase legal fees as lawyers spend time tidying up loose ends.
If timing is important ask which parts of the closing typically take the longest and get those started early.