Everything else probably fits into the “nice to have” category, but isn`t worth going to the mat. Borrowers often try to insert significant restrictions into covenants and insurance (for example.B. “The borrower will notify the lender of all major impending disputes.”). However, the author believes that the time spent negotiating the many places where restrictions on service could be inserted is largely wasted. The Common Law requires essential character as a precondition for delay in the performance of a contract and a loan agreement is no exception. Nor do lenders try to use intangible defaults as a reason for acceleration. Lenders do not want to manage the borrower`s business or incur the costs of liquidation if there is no compelling reason to do so. Lenders only take action when there is a significant problem, regardless of what the documents say. One consequence of all this is that it is always useful for a business owner to actually read the credit agreement they sign. It may seem obvious, but skipping “Boilerplate” or leaving too much legal assistance to check the terms and conditions often leads to documentation that contrasts with how a single business operates. Following a default, the lender has a number of options set out in the “acceleration” clause of the loan agreement. . .

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