A document confirming a lender’s intent to fund, subject to stated conditions.
For example, after approving a $250,000 equipment loan, the lender issues a commitment letter outlining the approved amount, interest rate, term, repayment schedule, and conditions that must be met — such as a current insurance certificate — before funds are released.
Why it matters: It provides binding assurance from a lender, allowing a business to confidently proceed with an acquisition or major project.
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