Accordion

Summary

Accordion: A provision in some Credit Agreement(s) giving the Borrower the right to increase its line of credit or loan amount with one or more Lender(s) up to a pre-determined amount if certain prescribed conditions are met. The Borrower requests to include this provision if it anticipates a number of scenarios, such as the need for more working capital or the intention to make future acquisitions. The advantage of this feature is that the lenders pre-approve the higher facility amount and sharing of collateral with additional lenders. However, they are not pre-committed to provide additional loans or increase their commitment.