Delayed Draw Term Loans (DDTL) Explained
A delayed draw term loan is a type of loan where borrowers, typically business owners, can request additional funds after the initial draw period has come to an end. The withdrawal periods and loan amounts are determined in advance.
One may also ask, what are the 4 types of loans?
- Personal Loans: Most banks offer personal loans to their customers and the money can be used for any expense like paying a bill or purchasing a new television. …
- Credit Card Loans: …
- Home Loans: …
- Car Loans: …
- Two-Wheeler Loans: …
- Small Business Loans: …
- Payday Loans: …
- Cash Advances:
Subsequently, is DDTL a revolver?
Drawn DDTL costs mirror term loan spreads. They differ from revolving credits in that once repayments are made they cannot be re-borrowed. … Unlike revolvers, which are generally unfunded, delayed-draw term loans fund over time, with the unfunded portion eventually reduced to zero.
How does unitranche debt work?
Unitranche debt or financing represents a hybrid loan structure that combines senior debt and subordinated debt into one loan, allowing banks to compete better against private debt funds. … Unitranche debt is typically used in institutional funding deals.
What is a free and clear incremental debt basket?
The “free and clear” basket is a fixed amount that the borrower is permitted to incur without having to demonstrate pro forma compliance with a financial ratio.
What is an incremental term loan?
A feature of some loan agreements that allows the borrower to add a new term loan, tranche, or increase the revolving credit loan commitments under an existing loan facility up to a specified amount under certain terms and conditions. …
What are the types of syndicated loans?
Basics of Syndicated loan
- Term Loan– It is a loan from a bank for a specific amount that has a specified repayment schedule and a floating interest rate. …
- Revolving Loan– In this facility the borrower decides how often they want to withdraw and in what time intervals.
What is incremental equivalent debt?
Incremental Equivalent Debt means Indebtedness incurred by one or more of the Loan Parties in the form of one or more series of senior secured first lien notes (but not term loans), junior lien term loans or notes, subordinated term loans or notes or senior unsecured term loans or notes, or any bridge facility; …
What is a Swingline sublimit?
A swingline facility is a sub-limit of a syndicated revolving credit loan whereby a lender makes a short term (operating not more than five days) loan, in smaller amounts, on shorter notice, and with a higher interest rate than is otherwise available for revolving credit loans.
Why do loans get syndicated?
Loan syndication most often occurs when a borrower requires an amount too large for a single lender to provide or when the loan is outside the scope of a lender’s risk exposure levels. Thus, multiple lenders form a syndicate to provide the borrower with the requested capital.
How does a ticking fee work?
A fee imposed to compensate for lag time, effectively requiring the paying of interest on the cash portion of a deal during a certain commitment period, triggered by various conditions (often regulatory approval) and generally running until the deal’s closing.
What does DDTL stand for?
A delayed draw term loan (DDTL) is a special feature in a term loan that lets a borrower withdraw predefined amounts of a total pre-approved loan amount. The withdrawal periods—such as every three, six, or nine months—are also determined in advance.
How does a DDTL work?
A delayed draw term loan (DDTL) is a negotiated term loan option where borrowers are able to request additional funds after the draw period of the loan’s already closed. … The delayed draw period is an extended draw period, usually offered to borrowers with good credit ratings.
What is the difference between a revolver and a term loan?
A revolving loan facility is a form of credit issued by a financial institution that provides the borrower with the ability to draw down or withdraw, repay, and withdraw again. … In contrast, a term loan provides a borrower with funds followed by a fixed payment schedule.