Commercial Loan Agreement Page 7
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14Social Enterprise Associates’ Tip Sheet #7: Commercial Loan Agreement
immediately preceding fiscal year and which shall be a
Also in Section 5, although you will have little
compilation a review audited and in consolidating
leverage in negotiating the terms of this
consolidated form. A review or audit shall be prepared by
agreement, you should do what you can to ensure
that the covenants you make are ones that you
independent certified public accountants selected by the
can keep.
Borrower and satisfactory to the Bank. A compilation shall
be certified by: (a) an authorized financial or accounting
For example, timely reporting of financial
officer of the Borrower if the Borrower is a corporation, (b)
information might seem easy enough, but
a general partner if the Borrower is a partnership, (c) a
sometimes the reporting requirements can be
overbearing – and missing a deadline can be
member or manager, as appropriate, if the Borrower is a
considered an event of default.
limited liability company, or (d) the Borrower, if the
Borrower is an individual; and
Don‟t take the covenants lightly.
(2) within days after the end of each of the first three
quarters of each fiscal year of the Borrower, an unaudited,
consolidated financial statement of the Borrower and any
consolidated subsidiaries as of the end of such quarter,
which statement shall consist of a balance sheet, statement
of income and retained earnings covering the period from
the end of the Borrower's immediately preceding fiscal year
to the end of such quarter, all in such detail as the Bank
may request and certified to be correct by: (a) an authorized
financial or accounting officer of the Borrower if the
Borrower is a corporation, (b) a general partner if the
Borrower is a partnership, (c) a member or manager, as
appropriate, if the Borrower is a limited liability company,
or (d) the Borrower, if the Borrower is an individual; and
(3) within ___________________ days after the end of
each fiscal year of the Borrower, a certificate of such
independent public accountants, and within days after the
end of each of the first three quarters of each fiscal year of
the Borrower a certificate as to whether any event of
default specified in Paragraph 7, or any event which, with
the giving of notice or lapse of time or both, would become
an event of default, has occurred and is continuing and
certified to be correct by: (a) an authorized financial or
accounting officer of the Borrower if the Borrower is a
corporation, (b) a general partner if the Borrower is a
partnership, (c) a member or manager, as appropriate, if the
Borrower is a limited liability company, or (d) the
Borrower, if the Borrower is an individual; and
(4) from time to time, such further information regarding
the business, affairs, and financial condition of the
Borrower as the Bank may request.
All financial statements delivered hereunder shall be
prepared on the basis of generally accepted accounting
principles and practices applied on a basis consistent with
those used in the preparation of the financial statements of
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