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. Representations and guarantees: these should be carefully considered in all transactions. It should be noted, however, that the purpose of insurance and guarantees in a facility agreement differs from its purpose in purchase and sale contracts. The lender will not attempt to sue the borrower for breach of representation and guarantee – instead, it will use an infringement as a mechanism to call a default event and/or ask for repayment of the loan. A disclosure letter is therefore not required with respect to insurance and guarantees in the facility agreements.
Obviously, the guarantee will not “secure” your loan in cash, unless the value you receive on sale is at least equal to the amount borrowed, plus interest and accumulated expenses. We cannot overemphasize the importance of registering the amount and terms of a loan in a written agreement. We do not recommend variable fees for use by individuals or small business lenders, as there may be difficulties in proving ownership and right to sell. We comment that you stay with some assets that are easy to sell. If you need to have floating assets, you should choose goods that are identifiable and do not turn over too often, such as Z.B. Cattle, rather than nuts and bolts. If there was ever a contract that was to be implemented in writing, it was a contract to lend money. A loan agreement is a contract between a borrower and a lender that regulates each party`s reciprocal commitments. There are many types of loan contracts, including “easy agreements,” “revolvers,” “term loans,” working capital loans. Loan contracts are documented by a compilation of the various mutual commitments made by the parties.
Mandatory costs: This formula, which deals with the costs incurred by banks to meet their regulatory obligations, is rarely negotiated. It is made available as a timetable for the agreement of the institutions. However, the interest rate should only apply to libor facilities and not to basic interest facilities, since a bank`s basic interest rate already contains an amount corresponding to the mandatory costs. Interest is due at the end of each interest period, interest periods may be fixed periods (usually one, three or six months) or the borrower can choose the interest period for each loan (the options are usually one, three or six months). There are many definitions in each facility agreement, but most are either standard – and generally uncontested – or specifically for individual transactions. They should be carefully considered and, if necessary, carefully considered using the lender`s offer letter/offer sheet.