Commercial Loan Agreement Page 6
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14Social Enterprise Associates’ Tip Sheet #7: Commercial Loan Agreement
Documents (as applicable) and the borrowing by it
hereunder, all of which shall be subject to the Bank's
approval.
Also in Section 4, don‟t underestimate clauses
____(b) The Bank shall have received an opinion of
like 4(d) here. If the agreement is for a line of
counsel of the Borrower, in form and substance satisfactory
revolving credit that allows for subsequent
to the Bank and its counsel, as to the matters referred to in
advances, each request for an advance is
Paragraphs 3(a), 3(b), 3(c), 3(d), 3(e), 3(f), 3(g), and 3(k)
considered a reaffirmation of all the
hereof, and further to the effect that this Agreement, the
representations you made in Section 4. Take
Note and the Related Documents have been duly authorized,
care to make sure that all those situations remain
the same as they were back when you originally
executed, and delivered and are the legal and binding
signed the agreement.
agreements of the Borrower enforceable in accordance with
their respective terms.
____(c) With respect to subsequent advances (in addition to
the Bank's absolute discretion to decline advances under a
Line of Credit), it shall be a condition precedent that no
event of default specified in Paragraph 7 hereof, and no
event which, with the giving of notice or lapse of time or
both, would become such an event of default, shall have
occurred and be continuing.
____(d) With respect to subsequent advances, a request for
an advance shall constitute an affirmation by the Borrower
Also in Section 4, “satisfactory” clauses are
that the representations made in Paragraph 3 hereof are and
common, and given your situation, you probably
shall be true on and as of the date of the making of each
cannot do anything about it. Know, however,
such advance, with the same force and effect as if made on
that it provides a catch-all for the bank to justify
dragging its feet.
and as of such date.
____(e) All legal matters incident to the transaction hereby
contemplated shall be satisfactory to the Bank and its
counsel.
5. AFFIRMATIVE COVENANTS. Except for the
After you make all your representations, and
following covenants which are marked with an "N/A" and
fulfill the conditions precedent for the loan
initialed by an officer of the Bank, so long as any lending
disbursement, in Section 5 you must keep a close
arrangement of the Bank shall be outstanding, and until
eye on the covenants you make. Covenants are
promises, and you will make them in both
payment in full of the Note and the performance of all other
affirmative and negative forms.
obligations of the Borrower hereunder and under any and
all Related Documents, the Borrower will comply with
Put simply, affirmative covenants are promises
additional covenants contained in Section 5 (a) of the
that you will do something. Negative covenants
Schedule, and the Borrower shall:
are promises that you will not do something.
You must continue to maintain these promises
____(a) Furnish Financial Statements. The Borrower shall
through the life of the loan.
furnish the Bank: (indicate statements by marking with an
"X")
(1) within days after the end of each fiscal year of the
Borrower, a financial statement of the Borrower and its
consolidated subsidiaries, as of the close of such fiscal year
which shall consist of a balance sheet, statement of income
and retained earnings covering the period of the Borrower's
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