These include provisions relating to installations, their purpose and availability. It will also contain details about repayment plans and interest payable. 6. Insurance and Warranties. The loan agreement will include many insurances and guarantees with respect to the borrower and relatives. These assurances and guarantees are provided to the lender by the borrower and, in some cases, by the main owners and guarantors. Here too, it is important that you fully understand and confirm what is presented to the lender, as any misrepresentation or violation of any of these insurances or guarantees constitutes a default in the loan and triggers the lender`s remedies. This is an area in which you should consult closely with your professional consultants to ensure that they understand all the facts related to your business, so that they can help you ensure that all insurance and guarantees are true and correct. It is also important to remember that the truth of these insurances and guarantees is probably confirmed by you every time you present the lender with a certificate of compliance, usually monthly or quarterly. There may also be provisions concerning advances on insurance or proceeds from disposal.
These often allow the borrower to use these funds first to replace the assets sold or damaged funds received in respect of them. These provisions allow costs and taxes to be deducted, so only net revenues should be used to replace assets. Advances: A borrower must ensure that he has some flexibility to make advances (early repayment of credit) without additional costs being incurred if possible. However, advances are only allowed at the end of interest periods, which avoids the payment of termination fees and, in most cases, is in the best interest of the borrower. Particular attention should be paid to all mandatory instalments (e.g. B in the case of sale or, in the case of private companies, to a float) and all advance costs to be paid. A credit agreement is a contract between a borrower and a lender that regulates the mutual commitments of each party. There are many types of credit agreements, including “facilities”, “revolvers”, “fixed-term loans”, “working capital loans”. Credit agreements are documented by a compilation of the various mutual commitments of the interested parties. This Section contains the insurances and guarantees, liabilities and defaults applicable to the entity concerned. It will also contain provisions that would protect the Bank against any change in circumstances that may affect its lending.
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