For commercial banks and large financial firms, „credit agreements” are generally not categorized, although credit portfolios are often roughly divided into „personal” and „commercial” credits, while the „commercial” category is then divided into „industrial” and „commercial” credits. „Industrial” credits are those that depend on the cash flow and solvency of the company and the widgets or services it sells. „Commercial real estate” loans are those that repay loans, but this depends on the rental income paid by tenants who rent land, usually for long periods. There are more detailed categorizations of credit portfolios, but these are always variations around the major themes. Credit agreements are usually written, but there is no legal reason why a credit agreement should not be a purely oral agreement (although oral agreements are more difficult to enforce). We work with both lenders and borrowers on commercial or private loan contracts. Our team of banking experts can help you prepare documents for secured or unsecured entities and review the terms of the proposed facility agreements. A credit agreement is a contract between a borrower and a lender that regulates the mutual commitments of each party. There are many types of credit agreements, including „facilities”, „revolvers”, „fixed-term loans”, „working capital loans”. Credit agreements are documented by a compilation of the various mutual commitments of the interested parties.
Before entering into a commercial credit agreement, the borrower first makes statements about its nature, solvency, cash flow and any collateral that it may mortgage as collateral for a loan. These presentations are taken into account and the lender then determines the conditions (conditions), if necessary, he is ready to advance the money. Credit agreements, like any agreement, reflect an „offer”, „acceptance of the offer”, a „counterparty” and can only include „legal” situations (a credit agreement with the sale of heroin drugs is not „legal”). Credit agreements are documented through their declarations of commitment, agreements that reflect the agreements concluded between the parties, a claim voucher and a guarantee contract (for example. B a mortgage or personal guarantee). The credit agreements offered by regulated banks are different from those offered by financial companies by giving banks a „bank charter” that is granted as a privilege and that contracts „public trust”. „investment banks” create credit agreements that meet the needs of the investors whose funds they wish to attract; „Investors” are always demanding and accredited organizations that are not subject to bank supervision and are subject to the need to respect public trust. Investment banking activities are supervised by the SEC and the focus is on whether the information is properly or correctly disclosed to the parties providing the funds. The credit agreements of commercial banks, savings banks, financial companies, insurance companies and investment banks are very different and all have a different purpose. „Commercial banks” and „savings banks”, because they accept deposits and benefit from FDIC insurance, generate credits that incorporate the concepts of „public trust”. Prior to intergovernmental banking, this „public trust” was easily measured by public banking supervisors, who were able to see how local deposits were used to finance the working capital needs of local industry and businesses and the benefits of using this organization. „Insurance organizations” that collect premiums for the provision of life or loss/accident insurance have established their own types of credit agreements.
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