Particular attention should be paid to all “default cross” clauses that affect the fact that a failure in one agreement triggers a standard between another. These should not apply to on-demand facilities provided by the lender and should include thresholds defined accordingly. Once you have information about who is involved in the loan agreement, you must describe the details of the loan, including transaction information, payment information and interest rate information. In the transaction section, you indicate the exact amount owed to the lender after the agreement is executed. The amount does not include interest over the life of the loan. They will also detail what the borrower must pay in return for the amount of money they promise to pay to the lender. In the “Payment” section, you`ll find out how the loan amount is repaid, how payments are made (p.B monthly payments, on demand, a lump sum, etc.) and information on acceptable payment methods (p. B for example, cash, credit card, payment order, bank transfer, debit payment, etc.). You must include exactly what you accept as a means of payment, so that no questions are allowed about payment methods. Automated Clearinghouse (ACH): an electronic transfer network that allows direct money transfers between participating bank accounts and lenders. This function is only available to borrowers who are not currently in an active pay position. Credit conditions can apply to aspects such as a change of ownership (even if the business is passed on to a family member), a change in business insurance, or the lender`s conversion to your main bank for the duration of the loan.
According to Wolfe, some conditions extend even to its subsidiaries beyond the primary enterprise. “If you find yourself in a credit or credit situation, you enter it with your eyes open,” Kakebeen said. “Don`t assume that everything is in your favor or because you receive the money, nothing else matters. It`s important. One of the things that reports is that it informs the bank if you keep the debt-service coverage rates (DSCRs) correct. According to Wolfe, these conditions are described in the loan agreement, probably in the “Positive Pacts” section.