Marginal loans can be provided by individual lenders, single limited partnerships, private and public companies, limited liability companies and other registered associations. During the 5-year period, there may have been a margin call. This would have been done if Jim owed the amount greater than his portfolio guarantee value, and he would have had to use his own additional capital or sell part of his portfolio to restore margin. In five years, Jim will be attacking his wallet. If at that time it has increased in value, it will be able to pay the loan and keep any additional amount. Advances: A borrower should ensure that he or she has some flexibility to pay advances (early repayment of the loan) without paying any additional fees if possible. However, advances are only allowed at the end of interest periods, which avoids the payment of breakage fees and, in most cases, is in the best interests of the borrower. Particular attention should be paid to all mandatory advances (for example. B in the event of a sale or, for private companies, on a float) as well as at any down payment costs to be paid. The lender should only have the right to demand repayment of the loan in the event of a delay and lawsuit. If the delay default has been corrected or reversed, the lender`s right to accelerate should cease.
Potential Standard/Standard: A facility contract contains a standard provision to cover events, although these are not yet events that probably do not occur. These values are called default or sometimes potential values. They are often negotiated by borrowers who do not want to be exposed to “hair triggers” from which they may lose access to their banking facilities. Borrowers should have legal advice on margin loan documents (and, most importantly, all related retention and security documents) to ensure that they are familiar with their own obligations, the lender`s rights and the time frames in which marginal appeals must be met, and how long the lender must wait to exercise its rights. With respect to illiquid securities, there is also a risk that the valuation received by the lender will be too low and that the guarantees will actually be acquired by the lender in accordance with the Financial Collateral Regulations (see below). During the term of the loan, it is important: that borrowers regularly check their credit account, since the value of the market value of the portfolio could change very quickly, and if the value decreases, the borrower must ensure that he will be able, if necessary, to sell the portfolio assets or repay the loan or replenish it with other assets, taking into account that the time frames in which marginal calls must be made can be very short (p.B.