Commercial loan term sheet vs LOI vs commitment confuses investors because lenders use the same words differently. On investor bridge and DSCR files, the sequence is usually: scenario review → term sheet → diligence → closing — not a 60-day bank committee cycle.
On investor bridge and DSCR files, words like term sheet, LOI, and commitment are not interchangeable. Jaken Finance Group issues deal terms on qualified non-owner-occupied files at bridge 8.99%–13.5% IO and DSCR 5.75%–10.5%. Overview: commercial real estate financing. Request: commercial loan request. (833) 264-7776.
Three documents defined
| Document | Typical binding nature | What it contains |
|---|---|---|
| Term sheet | Mostly non-binding | Rate, LTV/LTC, term, points, prepay, condition list |
| LOI (debt) | Sometimes partially binding | Indicative terms; may lock exclusivity |
| Commitment letter | Binding on stated terms | Approved leverage/rate subject to appraisal, title, insurance |
Property purchase LOI (seller) is separate from debt term sheet (lender). Do not sign a seller LOI with a finance deadline you cannot meet — see how long CRE loans take to close.
Term sheet — what to verify
On Jaken Finance Group bridge term sheets, confirm:
- Rate band — bridge 8.99%–13.5% IO or DSCR 5.75%–10.5%
- Leverage — as-is vs ARV vs LTC definition
- Term and extensions — 6–18 months bridge; extension fees
- Prepay — minimum interest or step-down
- Conditions — appraisal type, environmental triggers, liquidity proof
Negotiate extension options upfront if your exit is DSCR with 90-day seasoning.
Commitment letter — when it appears
Many investor bridge files close from term sheet once appraisal is paid and conditions clear — without a separate commitment letter. DSCR 5+ and larger commercial files may issue a formal commitment after appraisal review.
A commitment is not funded money until closing disclosures and wire instructions clear fraud review.
Worked example — Atlanta 10-unit
- Day 1 — scenario submitted with rent roll and contract
- Day 2 — term sheet: 68% LTC, 10.25% IO, 18 months, 2 points
- Day 4 — appraisal ordered
- Day 12 — conditions cleared, closing scheduled
- No separate commitment — term sheet conditions satisfied
Compare to bank: indicative LOI week 2, commitment week 8+, close week 12+ if no issues.
Red flags on any document
- “Indicative only” with no leverage definition
- Conditions you cannot satisfy (impossible environmental, personal tax years you will not provide)
- Prepay language that traps you if DSCR refi slips one month
Apply with full package: commercial loan request · (833) 264-7776
What lawyers mean by a letter of intent
A letter of intent is usually a short document that records a deal in principle. Cornell’s Wex entry treats most LOIs as non-binding except for pieces the parties mark as binding — confidentiality, exclusivity, or a deposit.
In property purchase, your seller LOI is not a lender promise. In lending, some shops issue an “LOI” that is really an indicative term sheet. Read the binding sentence. If rate and leverage are “indicative only,” you do not have a lock. If exclusivity runs 30 days, you may have limited your shopping without locking debt.
Why bank CRE write-ups look heavier than a private term sheet
National bank examiners use the OCC commercial real estate lending handbook when they review how banks underwrite CRE. Those files expect policy exceptions, concentration notes, and sponsor analysis that fit a supervised book.
A private investor term sheet is shorter because the desk underwrites collateral, leverage, and exit on a business-purpose file. It is not a substitute for a bank credit memo. It is also not weaker by default — it is a different product. If you need a bank-style commitment for a life-company takeout later, say so. The first document may still be a term sheet.
Rate lock, float, and “subject to” language
Ask three questions on every term sheet:
- Does the rate lock at acceptance or float until closing?
- Is leverage defined on as-is value, as-completed, ARV, or total cost?
- Which conditions are your job versus the lender’s vendors?
Bridge interest-only in the 8.99%–13.5% band often locks at acceptance on qualified files. DSCR in the 5.75%–10.5% band may re-price if the appraisal or insurance changes the ratio. “Subject to appraisal” is normal. “Subject to committee after you pay for the report” is a different risk. Compare that language before you waive a financing contingency.
Mark the term sheet against the purchase contract
Put the contract close date, inspection end, and any seller-financing collision on one page next to the term sheet conditions. If the seller wants day 12 and the term sheet needs a commercial appraisal plus a Phase I, the dates do not match. How long commercial loans take to close is the clock. Loan process is the sequence.
Negotiate extension options on the debt if your exit is DSCR with seasoning. A 12-month bridge with no extension and a 90-day lease-up plus processing is a math error, not a surprise.
When a commitment letter still dies
A commitment can fail at the table when title exceptions were not cleared, insurance does not bind in the entity name, or a material adverse change hits the property. Wire-fraud review can pause funding even after documents are signed. A commitment is not cash until the title company records and the wire lands.
Many Jaken Finance Group bridge files fund from a satisfied term sheet once appraisal is paid and conditions clear — without a second formal commitment letter. Larger or DSCR 5+ files may issue a letter after the report. Neither path is “better.” The path that matches your dates is better.
Exclusivity, deposits, and broker retainers
Some debt LOIs ask for a good-faith deposit or an exclusive period. Treat that like a contract clause. Ask whether the deposit applies to points, sits in escrow, or is earned on acceptance. Ask what happens if the appraisal misses value. Get those answers in writing before you stop talking to a backup lender.
A broker retainer is not a term sheet. A rate quote in email is not a term sheet. If you need something a seller will accept as proof of funds, ask for that product by name. Do not forward an “indicative only” PDF and call it approval.
Worked paper trail — Nashville 14-unit
Day 1: sponsor submitted rent roll and contract through commercial loan request. Day 2: term sheet at 68% LTC, 10.25% IO, 18 months, two points, commercial appraisal required. Day 4: appraisal ordered. Day 12: conditions cleared. No separate commitment letter. The binding pieces were the accepted term sheet, paid appraisal, and cleared title.
A bank on the same address issued an indicative LOI in week two and a commitment in week nine. The seller would not wait. The private term sheet was the document that matched the contract.
How to negotiate without turning the sheet into fiction
Negotiate leverage, interest-only versus amortizing, prepay, extensions, and whether a guaranty is full or limited. Do not negotiate a DSCR permanent rate onto a vacant value-add file. Product first, then terms. Bridge loans for real estate investors and DSCR loans are different sheets.
If the sheet demands personal tax returns and you will not provide them, stop and change product — commercial loan with no tax returns — instead of signing and hoping. If the sheet names the wrong entity, fix vesting before you accept. Investment property loans for LLC covers the naming problem.
Call (833) 264-7776 with the address and the seller’s drop-dead date before you sign exclusivity you cannot meet.
Recourse, carve-outs, and who is actually on the hook
The term sheet should say whether the loan is full recourse, limited guaranty, or non-recourse with standard “bad boy” carve-outs. Entity borrowing does not erase a guaranty. If two members will own 50/50 and only one will guarantee, write that before acceptance. Investment property loans for LLC is the vesting companion to this paragraph.
A commitment letter that is silent on recourse is incomplete. Ask. Do not assume “LLC means no personal risk.”
Prepay, minimum interest, and extension math
Bridge sheets often include minimum interest or a step-down prepay. Model the exit month, not a fantasy refinance in month three. If DSCR takeout needs 90 days of seasoning after the last lease plus two weeks of processing, a six-month bridge with a punishing prepay is the wrong term.
Extension options should list fee, notice period, and whether performance tests apply (occupancy, no default). Negotiate extensions when you accept the sheet, not when you are 20 days from maturity. Bridge loans for real estate investors are short tools. Price them as short tools.
Material adverse change and “as presented” clauses
Many sheets say terms assume the file remains as presented. A new municipal violation, a lost major tenant, or a sponsor liquidity drop can reopen leverage. That is not bait-and-switch if the clause was on page one. Tell the desk when facts change. Silent updates are how commitments get pulled.
What sellers mean when they say “we have a commitment”
Listing agents sometimes call any lender email a commitment. Ask to see the document. If it says indicative, it is not a commitment. If it expired last month, it is not a commitment. If it is in a different buyer’s name, it is not your commitment.
Your job as the incoming buyer is to run loan process on your entity and your dates. A seller’s stale bank letter does not shorten your appraisal.
Comparing three documents on one deal
Keep a one-page tracker: seller LOI or PSA dates, debt term sheet conditions, and any later commitment expiration. Share it with counsel and the qualified intermediary if you are in a 1031. Misaligned dates kill more purchases than a 25-basis-point spread.
Jaken Finance Group qualified pricing remains bridge 8.99%–13.5% IO and DSCR 5.75%–10.5%. The document you sign should sit inside those bands and inside your contract calendar. Submit the file that supports the sheet at commercial loan request. For 5–10 unit permanent exits, confirm the income test on multifamily 5–10 unit DSCR loans before you treat a bridge sheet as a permanent lock.
Legal meaning versus lender slang
Cornell’s letter of intent definition is useful: an LOI can be a negotiation map or a binding contract depending on the words you signed. Commercial debt uses the same ambiguity. Read the “non-binding except for…” sentence. If exclusivity and a deposit are binding, you have already limited your options.
Bank CRE desks follow the OCC’s commercial real estate lending handbook. That process is built for committee credit, not a 10-day investor close. Private term sheets on collateral and exit can support a seller date that a bank LOI cannot.
Submit the file that supports the sheet at commercial loan request. Call (833) 264-7776 before you sign exclusivity you cannot meet.
Rates, terms and conditions offered only to qualified borrowers and are subject to change at any time without notice. Closing times are in business days and commence upon receipt of appraisal payment and satisfaction of borrower conditions. All loans are subject to full underwriting for loan approvals. Jaken Finance Group only finances non-owner occupied investment properties.