Debt Fund Raise · Question

How do I compare two debt offers that look similar?

Short answer

Put both offers side by side and compare the full cost and the full obligations, not just the headline interest. Check fees, how the rate can change, tenure and repayment pattern, security and guarantees demanded, prepayment terms and covenants. The cheaper-looking offer often carries tighter conditions or extra charges that change the real comparison.

In more detail

Two offers can share the same stated rate and still differ widely in practice. Build a simple sheet with one column per offer and fill in every line below from the sanction terms, not from conversation.

Pricing basis: whether the rate is fixed or linked to a benchmark, and how often it can be reset.
Charges: processing, documentation, inspection, valuation, and any renewal or commitment fees.
Repayment: tenure, instalment pattern, moratorium and any balloon payment at the end.
Security: what property or assets are charged and whether a personal or corporate guarantee is required.
Flexibility: prepayment and part-payment terms, and what the lender charges for closing early.
Covenants: limits on further borrowing, dividends, changes in ownership, and reporting duties.
Penalties: charges for late payment and the consequences of a covenant breach.

Then turn pricing into a single yearly cost by estimating total interest and fees over the expected holding period, since many loans are closed or refinanced before full term.

Consider how each lender behaves after sanction. A lender with slower processing, rigid renewals or heavy reporting can cost management time. Ask for sample documents early and have your adviser read the conditions precedent and events of default.

Same rate, different loan

Offer one has a slightly higher rate but allows free part prepayment and asks for no personal guarantee. Offer two looks cheaper but charges a penalty on early closure and demands a promoter guarantee. For a business expecting to repay early, the first may be the better fit.

Key points

Compare total cost and obligations, not only the stated interest rate.
List fees, rate reset terms, security, guarantees, prepayment rules and covenants for each offer.
Convert pricing into one expected annual cost over your likely holding period.
Read conditions and default clauses before choosing, not after accepting.
Consider the lender's service and flexibility, which numbers alone will not show.

Who this applies to

Borrowers holding two sanction letters or term sheets for similar facilities.
Finance heads running a refinancing or rate renegotiation.
Promoters who prefer the lowest quoted rate by default.

Last reviewed 3 October 2026

This answer is general information, not advice on your particular case. Terms, eligibility, and requirements change, so check the current position with the relevant institution or authority. Lalsar Holdings' financial advisory and financing work is advisory and facilitation only. Lalsar Holdings is not a lender. Sanction and disbursement of any credit facility is at the sole discretion of the partner bank, NBFC, or financial institution involved, subject to their own eligibility criteria and credit policy.