A commercial credit contract is an agreement between a company and a lender. It documents the promises made by both parties – the lender`s promise to give money and the borrower`s promise to repay that money. While this list does not cover all the words you might see in the fine print of your credit contract, it does contain definitions of many common credit conditions that you could eventually issue and even cost you in the end. Alliances: Alliances are promises of both parties. Most lenders will require several agreements under the loan agreement: a deferred loan is when the borrower and lender agree to an agreement that allows the borrower to start payments at some point in the future, instead of right away. 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. Typical clause and acceleration: both sides have made promises and if one party does not keep its promises, the agreement is late. If the borrower is late in the loan (does not meet the conditions), the loan contract provides for all fines and penalties. An acceleration clause can be used as a penalty. In this case, if the borrower does not meet all the requirements of the agreement, the loan may be due immediately and payable. Before entering into a commercial loan agreement, the borrower first decides on his affairs concerning his character, his creditworthiness, his cash flow and all the guarantees he must put in collateral for a loan. These presentations are taken into account and the lender then determines the conditions under which they are willing to advance the money. It`s far from a comprehensive guide, and each business loan contract will have different features that you should pay attention to, but these are some of the most important things you should pay attention to.