Capital actually means the amount you borrowed, without interest. If you have lent $100,000 for your business, your principal will be $US 100,000. Borrower Presentations: As a borrower, you are asked to confirm that certain statements are true. These statements may include your assurance that the company is legally able to do business in the state, that it complies with tax law, that there is no right of pledge or recourse against the company that could affect its ability to repay the loan, and that the company`s financial reports are accurate and accurate. These are just a few common representations; There may be others for your loan. A representative of your board of directors may need to sign this loan. A commercial loan agreement is a document that contains all the logistical details of the commercial debt that a borrower will take care of. Reviewing your loan agreement before signing the polka dot line is an absolute must. Otherwise, you set up a trade credit with conditions you don`t even know. Default and acceleration clause: both parties have made commitments and if one party does not keep its promises, the agreement is late. If the borrower is late in the loan (the conditions are not met), the loan agreement sets all fines and penalties.
An acceleration clause can be used as a penalty. In this case, if the borrower does not meet all the requirements of the contract, the loan may be due and payable immediately. The financial company evaluates the contract, the delivery capacity of your company and the creditworthiness of your customer. If he approves the arrangement, he will take over the counting of the project. You submit your invoices to the financial company while closing each step. In this example, the percentage advance of the financial company is 90% of the invoice amount (90,000 USD) paid the day after the deposit. The financial company forwards the invoice to your customers and pays you the rest ($US 10,000) minus the factor fee if the customer finally makes the payment two months later. The fee is 2% of $90,000 or $1800, so you will receive $8,200 ($10,000 – $1,800) if your client pays the invoice amount to the financial company.
Additional fees may be charged if your customer withholds payment longer than the delay (in this case 60 days). Parties, relationship and amount of credit: both parties to the credit agreement are described at the beginning. . . .