CLD - Module 3 Loan Agreements

Question 1

Loan Agreement

Answer 1

• a written contract governing the lending arrangement
• It specifies the rights and duties of the bank and the borrower with regard to a specific loan or credit arrangement.
• It also sets forth the conditions under which the loan was granted and establishes the parameters within which the borrower must operate.
• used to establish certain conditions for making the loan, to set restrictions to safeguard sources of repayment, and to limit the future activities of the borrower.
• also contain conditions, covenants, and restrictions that are aimed at providing a loan
  officer with early warning of deterioration in the financial condition of the borrower.