A letter agreement, also known as a mandate letter, in which a lender sets out the terms on which it is prepared to lend money to the borrower. It generally attaches the agreed term sheet.

Commitment letters are typically used in syndicated lending and in transactions where there is a requirement for a degree of certainty that the facility will be made available, such as acquisition finance. In leveraged buyouts (LBOs) by private equity firms, this letter may be known as a debt commitment letter, to distinguish it from an equity commitment letter. The lenders typically address the debt commitment letter to the special purpose vehicle (SPV) formed for the LBO and commit to providing the debt financing to the SPV at the closing of the transaction on satisfaction of certain conditions. The debt commitment letter is usually delivered (along with the equity commitment letter) to the seller (in a share or asset sale) or target company (in a takeover or scheme of arrangement) when the acquisition agreement is executed to serve as evidence that the acquisition vehicle has sufficient funds to make the acquisition.