Delayed Draw Term Loan


DEFINITION of 'Delayed Draw Term Loan'

A special feature in a term loan that stipulates that the borrower can withdraw predefined amounts of the total pre-approved amount of a term loan at contractual times. This special type of term loan is only offered to individuals and firms that meet and maintain certain contractual requirements and have outstanding credit ratings.

BREAKING DOWN 'Delayed Draw Term Loan'

There are different types of contractual caveats the borrower must meet, such as maintaining a certain level of cash on hand or maintaining a minimum quick ratio factor. Any contractual obligations will limit the borrower from performing some particular acts, such as over leveraging, but they are still considered a flexible feature for a term loan.

  1. Debt Ratio

    A financial ratio that measures the extent of a company’s or ...
  2. Equity Financing

    The act of raising money for company activities by selling common ...
  3. Quick Ratio

    The quick ratio is an indicator of a company’s short-term liquidity. ...
  4. Debt

    An amount of money borrowed by one party from another. Many corporations/individuals ...
  5. Debt Financing

    When a firm raises money for working capital or capital expenditures ...
  6. Leverage

    1. The use of various financial instruments or borrowed capital, ...
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