Evergreen Facility Agreement


A lender may offer a letter (or note) that is always green. It is essentially a letter of credit that the borrower insures to look for credit elsewhere. The letter informs the lender that, in the event that the borrower is unable to meet the credit obligation, the lender offering the Evergreen Letter guarantees that it covers all debts that the borrower cannot satisfy. As with credit, the letter can be extended indefinitely until the borrower no longer needs it. When it comes to extending an Evergreen loan, the bank looks at several criteria. First, it wants to see that the borrower can still support the debt. The borrower provides the bank with updated accounts. The bank wants to see that the borrower`s income significantly exceeds his debt. Look at the following example.

Company A, which supplies cleaning products to other companies, is waiting for payment to get various orders. Credit cards can be issued by a bank and added to a customer`s account in addition to a checking account. They can also be issued by other companies with which the consumer does not have additional account links. A loan from Evergreen is also called a revolving loan. This means you can use it, refund the money and use it again. The credit is checked annually by the lender. If you meet the renewal criteria, the credit will continue. .

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