Security Agreement – A document that gives a lender a security interest in assets mortgaged as collateral. This agreement, signed by the borrower, describes the guarantees and their location in sufficient detail to allow the lender to identify them and gives the lender the right to sell or transfer the transferred collateral when the borrower is unable to honour the commitment. Blanket Assignment – An agreement that gives the lender a security interest in all of the borrower`s assets. Non-eligible collateral – receivables or inventory that do not meet the criteria set out in the loan agreement. Ineligible assets remain included in the ABL lender`s guarantee pool, but are not eligible for inclusion in the credit base. Borrower consultants should advise their clients on potential compliance issues at the earliest stage of financing – ideally, if the company negotiates an agenda for a proposed credit facility. Appointment sheets generally summarize qualification requirements, insurance, communications, financial agreements, negative agreements and default events that a borrower may see in their ABL credit contract. It is therefore essential that the consultant draw a client`s attention to important operational issues when negotiating an agenda, particularly if these restrictions are likely to apply for the next four or five years. Counsel should suggest that clients clearly define the terms to be used in calculating availability, eligible receivables, eligible stocks, reserves and other important provisions. In addition, as might be expected, ABL facilities generally offer little flexibility for managing assets other than normal operations. If the borrower has sold assets, the advisor should indicate that these orders are expressly authorized in the schedule. By discussing critical business issues in advance when negotiating the schedule and not after the lender`s development of the credit contract, the lender will have a clearer understanding of the borrower`s key business factors that influence the terms of the transaction, making the transaction marketing processes and approval of final documents much more fluid.

Since lenders participating in multi-issuer facilities may not see the full credit contract until a few days before the conclusion, it is important to ensure that credit issues are addressed during the initial phase of negotiations, to avoid credit authorization problems occurring within the eleventh hour. This may seem obvious, but don`t neglect the security agreement. Although businessmen generally do not focus on the security agreement, there may be a large number of hidden problems in an ABL security agreement. Lenders are often buried with different, more stringent termination requirements and agreements in the security agreement, particularly with regard to receivables. For example, a security agreement may prohibit the borrower from adjusting, forgiving or modifying claims. For many borrowers, this standard is too strict to work for their business. To improve compliance success, report all reporting obligations to the “Notification” section of the credit contract and ensure that the documents cooperate. Bet Passu – Credit facilities in which two or more lenders are treated on the same model as part of a loan agreement.

Most often applied to security, can also relate to the structure of the credit, documentation, maturity or any other material condition. Aging (schedule) – A periodic report listing a borrower`s claims or liabilities per customer or supplier, which lists the current status or crime of balances due or due. These reports are generally used to determine whether the borrower meets the basic credit requirements in the loan agreement.