Delayed-draw term loan (DDTL)

BY MICHAEL SHANG · SIXTEEN YEARS IN COMMERCIAL BANKING · UPDATED 2026-11-06

// THE SHORT ANSWER

A delayed-draw term loan is a term loan the lenders commit to now but the borrower draws later, in one or several amounts, within an availability period: to fund an acquisition, a build, or equipment as it arrives. Until it is drawn, the lenders hold capital and liquidity against the promise, so they charge a ticking or commitment fee on the undrawn amount. Once drawn, each amount is ordinary term debt, and whatever is not drawn by the end of the availability period is cancelled.

BASIS  Practitioner judgment from sixteen years in commercial banking, set out in How Bankers Think (Highbank Press, 2026). Every borrower on this site is a composite constructed for teaching, not a client. The market is mid-market commercial lending as practised in New Zealand and Australia; where a convention differs elsewhere, the page says so.