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. Loan Loss Provision

    An expense set aside as an allowance for bad loans (customer ...
  3. Direct Consolidation Loan

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

    A type of option that a company can buy that gives it the right ...
  5. Debt

    An amount of money borrowed by one party from another. Many corporations/individuals ...
  6. Full Recourse Debt

    A guarantee that no matter what happens, the borrower will repay ...
Related Articles
  1. Markets

    What is a Loan Loss Provision?

    Banks set aside loan loss provisions to cover losses from bad loans.
  2. Personal Finance

    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. Managing Wealth

    Explaining Debt

    Debt is any amount a borrower owes a lender.
  4. Investing

    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
  5. Investing

    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. ...
  6. Managing Wealth

    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.
  7. Personal Finance

    8 Top Alternatives to Car Title Loans

    Before you sign up for a car title loan, investigate these 8 alternate strategies.
  8. Personal Finance

    Understanding Loans

    A loan is the act of giving money, property or other material goods to another party with the expectation of being repaid.
  9. Personal Finance

    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.
  10. Personal Finance

    Personal Loans vs. Car Loans

    How to tell whether a personal loan or a car loan is better for you.
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. AAA

    The highest possible rating assigned to the bonds of an issuer by credit rating agencies. An issuer that is rated AAA has ...
  2. GBP

    The abbreviation for the British pound sterling, the official currency of the United Kingdom, the British Overseas Territories ...
  3. Diversification

    A risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique ...
  4. European Union - EU

    A group of European countries that participates in the world economy as one economic unit and operates under one official ...
  5. Sell-Off

    The rapid selling of securities, such as stocks, bonds and commodities. The increase in supply leads to a decline in the ...
  6. Brazil, Russia, India And China - BRIC

    An acronym for the economies of Brazil, Russia, India and China combined. It has been speculated that by 2050 these four ...
Trading Center