Common agreements have conditions that set a precedent for granting the loan, agreements to ensure that the borrower`s status remains unchanged, and agreements for defaults in which lenders may impose prepayment in circumstances where the lender considers the lender to be in danger. They can be extended to guarantors, a parent company or even a subsidiary. A commitment fee is usually collected by the lender in order to compensate it for not earning interest, while the loan remains allocated, but is not used. The lender may also collect settlement or change fees that should be subject to a a suitable audit. Guarantees are generally related to the validity, legality and applicability of the borrower`s obligations (as the borrower must be properly contracted, has the power to borrow and is not late with other loan agreements) and the financial and economic situation of the borrower (that he knows no dispute against him and that the accounts are properly verified and correct). Delay events essentially give the lender the contractual right to „accelerate” repayment without recourse to the courts and the power to terminate the loan upon discovery of an infringement. It will also be a precondition for the use that the default does not continue or result from the proposed loan and that the borrower`s repeated statements regarding the proposed date of use are accurate. The borrower should ensure that corrected defaults do not pose a problem for withdrawal of funds. The borrower will prefer a very broad definition of the „working capital” loan objective, but the lender is unlikely to agree. The borrower should then ensure that the objective for which the loan is required is covered. This is usually displayed in the loan calendar. Late interest (the interest rate a borrower must pay in the event of a substantial breach of credit agreements) is generally calculated with an additional 1% margin, but if the borrower is unable to apply for a discount, he or she should ask for additional time.
Alliances need to be carefully considered, as they could limit the borrower`s activity if they are formulated too harshly, or if they are too soft, the lender may not have sufficient control over the credit. It is generally necessary for the borrower to transmit „in a form and substance satisfactory to the lender” all the documents and information he needs before he can apply for use to use funds. Terms such as „and other information that the lender may require” should be avoided by the borrower, since if the conditions are not met, the lender has the right to withdraw from the loan return. Default agreements and clauses can also be used to regulate changes to the basis of a loan agreement. Representation and guarantees are generally repeated at regular intervals to ensure that the borrower`s status remains unchanged throughout the agreement. Lenders want this to apply on a daily basis throughout the loan, but borrowers want it to apply only to the counting and interest payment dates. The lender will also insist that the agreement be drafted so that parts of the contract are put into service immediately after completion and that fees are due, rather than waiting for the borrower to receive the funds. A negative pledge is a blanket prohibition on collateral and generally includes any other agreement under which a third party could acquire a better right to the borrower`s assets than the lender.