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.