A commercial loan, also known as a commercial loan, is any type of loan intended for commercial purposes. The document that describes the details of this loan is called the commercial loan agreement. If you`re trying to determine if you need a credit contract, it`s always best to be on the security side and design it. If it is a significant amount of money that will be refunded to you, as agreed by both parties, it is worth taking the additional steps necessary to ensure that the refund is made. A loan agreement is designed to protect you if in doubt, to establish a loan contract and to ensure that you are protected, no matter what. Borrowers: The definition of the borrower includes all group companies that require access to the loan, including revolving credits (flexible credits as opposed to a fixed amount repaid in increments) or the working capital component. This should also include all target companies acquired with the funds made available. Subsidiaries that need a provision may need to join the group of borrowers. If there is a reason why the affected companies cannot be parties to the agreement when they are executed – for example. B in the event of an acquisition by limited companies – prior approval from the bank would be required for them to be included in the agreement at a later date. If there are foreign companies in the group, it is worth asking whether they will have access to credit facilities or how. The facility agreement may also designate an individual borrower and allow that borrower to continue lending to other members of his or her group of companies. Applicable legislation: Business loans are subject to national laws that differ from state to state.
Your loan agreement should contain a rate on which national law governs the loan. This section contains the insurance and guarantees, commitments and delays that apply to each facility. It will also contain provisions that protect the bank from any change in circumstances that may affect its lending activities. To receive ____loan amount in words and numbers____, by ____name____ at the postal address of ____address____ (the borrower), he agrees to pay ____name____ with a postal address of ____address____ (the “lender”). A commercial credit contract is an agreement between a company and a lender. It documents the promises made by both parties – the lender`s promise to give money and the borrower`s promise to repay that money. For more information on the Cannais provisions of facilitated contracts, visit the Loan Markets Association or the Association of Corporate Treasure. Advances: A borrower should ensure that he or she has some flexibility to pay advances (early repayment of the loan) without paying any additional fees if possible. However, advances are only allowed at the end of interest periods, which avoids the payment of breakage fees and, in most cases, is in the best interests of the borrower. Particular attention should be paid to all mandatory advances (for example. B in the event of a sale or, for private companies, on a float) as well as at any down payment costs to be paid. Representations and guarantees are similar in all facility agreements.
They focus on the borrower`s legal capacity to enter into financing agreements and the nature of the borrower`s activity. They will often be broad and the borrower may try to limit them to issues that, if not correct, would have a significant negative effect. This qualification may apply to a large number of insurance and guarantees relating to the borrower`s activities (for example. B litigation, environmental and accounting matters), but will probably not be acceptable to the lender in order to limit the borrower`s ability to enter into financing agreements or with respect to important financial information.