Debt Accordions

DEFINITION of 'Debt Accordions'

A loan provision which allows the borrower to add additional investors to the loan subsequent to the initial loan date. This provision helps the borrower if they are struggling to make payments, and in turn, helps the lender receive the full payments.

BREAKING DOWN 'Debt Accordions'

Debt accordions generally occur with regards to commercial loans. If the company is going through a rough patch, it is often in the shareholder's best interests to take on some of the debt liability, rather than see the company go bankrupt, leaving them with nothing. This is especially common if the debt is collateral debt, where the collateral is necessary to continue business operations.

RELATED TERMS
  1. Collateral

    Property or other assets that a borrower offers a lender to secure ...
  2. Direct Consolidation Loan

    A loan that combines two or more federal education loans into ...
  3. Accordion Feature

    A type of option that a company can buy that gives it the right ...
  4. Full Recourse Debt

    A guarantee that no matter what happens, the borrower will repay ...
  5. Standing Loan

    A type of loan where payments are made of interest only. Repayment ...
  6. 100% Mortgage

    A mortgage loan in which the borrower receives a loan amount ...
Related Articles
  1. Economics

    What is a Loan Loss Provision?

    Banks set aside loan loss provisions to cover losses from bad loans.
  2. Credit & Loans

    What Is Collateral?

    Collateral is property or other assets that a borrower offers a lender to secure a loan. If the borrower stops making the promised loan payments, the lender can seize the collateral to recoup ...
  3. Professionals

    Introduction To Loans

    Learn about the many types of loans and how they function in business.
  4. Credit & Loans

    What are the Five C's of Credit?

    The five C’s of credit are what banks and other lenders evaluate about a potential borrower when making a lending decision. The five C’s are Character, Capacity, Capital, Collateral and Conditions. ...
  5. Credit & Loans

    Debt Consolidation: When It Helps, When It Doesn't

    Here's the smart way to use a debt consolidation to get your financial life back on track
  6. Economics

    Explaining Debt

    Debt is any amount a borrower owes a lender.
  7. Credit & Loans

    Commercial Real Estate Loans

    Obtaining a commercial real estate loan is quite different from borrowing for residential real estate. Here's what to expect and how to get what you need.
  8. Credit & Loans

    8 Top Alternatives to Car Title Loans

    Before you sign up for a car title loan, investigate these 8 alternate strategies.
  9. Credit & Loans

    Understanding Loans

    A loan is the act of giving money, property or other material goods to another party with the expectation of being repaid.
  10. Credit & Loans

    How To Apply For a Personal Loan

    Learn about different avenues for applying for a personal loan, and learn valuable tips to help you get your personal loan application approved.
RELATED FAQS
  1. Are secured personal loans better than unsecured loans?

    Read about the differences between secured loans and unsecured loans and how they are used. Learn about forms of collateral ... Read Answer >>
  2. What is the difference between secured and unsecured debts?

    Learn the differences between secured and unsecured debt; discover how banks buffer risks associated with each type of loan ... Read Answer >>
  3. How do I determine whether a debt consolidation loan is a good debt relief option?

    Determine whether a debt consolidation loan can help you dig yourself out of debt. Learn about the different types of debt ... Read Answer >>
  4. What are some examples of debts that I can consolidate?

    Read about different kinds of debts than can be combined into a consolidation loan, including unsecured debts, secured debts ... Read Answer >>
  5. How does debt consolidation lower my monthly payments?

    Find out how combining your debts into a single debt consolidation loan might actually lower the total amount you have to ... Read Answer >>
  6. What are the pros and cons of life insurance policy loans?

    Find out the pros and cons of borrowing against your life insurance policy to help you decide if this loan type is the right ... Read Answer >>
Hot Definitions
  1. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  2. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  3. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
  4. Generally Accepted Accounting Principles - GAAP

    The common set of accounting principles, standards and procedures that companies use to compile their financial statements. ...
  5. DuPont Analysis

    A method of performance measurement that was started by the DuPont Corporation in the 1920s. With this method, assets are ...
  6. Call Option

    An agreement that gives an investor the right (but not the obligation) to buy a stock, bond, commodity, or other instrument ...
Trading Center