Management and Organizational Studies 2275A/B Chapter Notes - Chapter 26: Unsecured Creditor, Security Interest, Personal Property

• School: Western University
• Department: Management and Organizational Studies
• Course: Management and Organizational Studies 2275A/B
• Professor: Philip King

Document Summary

Credit is contractual relationship: lender agrees to lend $ in exchange for promise by borrower to, usually w/ interests and within certain time frame repay loan. Credit can be secured or unsecured: debtor and creditor law, secured credit: debt where creditor has interest in debtor"s, unsecured credit: debt where creditor has only contractual property to secure payment right to be repaid. Bank will require extensive documentations to support loan application. Banks considering 2 major criteria in evaluating loan application: borrower"s financial health, security that borrow can provide if loan can"t be repaid. Lenders consider state of economy, particular industry in which debtor carries on business, state of credit markets, and whether personal guarantees available. Credit/loan agreement terms negotiated by parties of default, etc : may include repayment terms, interest, security, fees, events, events of default: failure by debtor to make required payments on loan/fulfill its other obligations under credit agreement.