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Can a Commercial Installment be a Revolver

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Question: 
On an existing commercial loan, can you add new money as long as the amount doesnt exceed the original loan amount? For example, an original loan was $74,000 with a current balance of $64,000, may we add-on $2,000 in new money. The maturity date and interest rate will remain the same
Answer: 

Loan structure is whatever your credit agreement (contract) allows. Anything you later want to change should be handled with a modification agreement. The risks, if any, are contractual in nature (state law)...and something you should discuss with the bank's attorney. If similar situations are likely to arise from time to time, it's smart to write counsel's advice into your formal loan procedures for future reference.

First published on 11/20/2022

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