A facility contract can be divided into four sections: There are several elements of a loan agreement that you must include to make it enforceable. These are some of these components that are true regardless of the type of loan contract. To explain how a credit contract is broken down, we divided it into sections that are easier to understand. As far as guarantees are concerned, if each party signs a separate security agreement for it, you must include the date on which the security agreement is signed or signed by each party. In addition, you must include a section describing all warranty information if you have one. A guarantor is also known as a co-signer. This person or company agrees to repay the loan in the event of a late payment from the borrower. They can add more than one guarantor to the loan agreement, but they must accept all the terms stipulated in the loan, just like the borrower. Just as you have registered the borrower`s information, you must include the information of each guarantor and he must sign the agreement. They must provide their full legal name and address. If you don`t include a deposit, you don`t need to include this section in the loan agreement. Finally, you must include a section containing the date and place of the signing of the agreement. In this section of the loan agreement, you need to provide different information, for example.

B the effective date of the agreement, the state in which a judicial procedure is to take place and the particular county within that state. This is important because there are details about when the loan contract is active and prevents it from moving elsewhere in case of dispute or non-payment on the contract. 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. 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. They may also include advance information if the borrower is interested in prepaying the loan.

Many borrowers are concerned about advances and you would be wise to include a clause in your credit agreement that talks about advance options, if any. If you allow a prepayment, you must include this information and details if they are allowed to pay all or part only in advance and if you charge a down payment fee if they wish. If you charge a down payment fee, you need to state in detail how much it will be.