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Loan acceptance

Loan acceptance occurs when a borrower accepts the terms and conditions of a loan in writing. The details of loan acceptance are usually presented in an offer letter that states:

  • The amount of the loan (principal), loan type and terms of repayment
  • Any security required (claims to the assets of the borrower)
  • Covenants or reporting requirements
  • Costs and fees

Often a borrower will seek independent legal advice before accepting a loan agreement. This legal advice can be a condition of the lender making the loan. For example, this could happen when a matrimonial home is taken as collateral to support a personal guarantee. In such a case, it is prudent to make the spouse—who may or may not be involved directly in the business—fully aware that the other spouse has pledged their home to support the business.