Conditions to all borrowings: Overview, definition, and example
What is conditions to all borrowings?
Conditions to all borrowings are the standard requirements that must be met every time a borrower requests funds under a loan agreement. These are recurring conditions—unlike conditions precedent to the first borrowing—that apply to each drawdown, advance, or disbursement of funds. They ensure that the borrower remains in good standing and that the lender’s risk profile has not materially changed.
Why is conditions to all borrowings important?
These conditions are important because they provide the lender with ongoing control and assurance that the borrower is still meeting the terms of the agreement. They help prevent further disbursements if something has gone wrong, such as a default, misrepresentation, or material adverse change. Including these conditions protects the lender and encourages the borrower to maintain compliance throughout the life of the facility.
Understanding conditions to all borrowings through an example
A company enters into a revolving credit facility. Every time it submits a borrowing request, it must certify that no default has occurred, all representations remain true, and all required financial reports have been delivered. If the company misses a covenant compliance certificate or triggers an event of default, the lender can withhold the next loan draw based on the failure to meet conditions to all borrowings.
Example of how a conditions to all borrowings clause may appear in a loan agreement
Here’s how a conditions to all borrowings clause may appear in a credit agreement:
"The obligation of the Lender to make any Loan or issue any Letter of Credit is subject to the satisfaction of the following conditions: (a) the representations and warranties of the Borrower shall be true and correct in all material respects; (b) no Default or Event of Default shall have occurred and be continuing; and (c) the Borrower shall have delivered all documents required by this Agreement in connection with such request."
Conclusion
Conditions to all borrowings are recurring safeguards built into loan agreements to protect lenders and ensure borrowers stay compliant over time. They apply to every funding request and must be met consistently to access loan proceeds. These conditions help manage risk, maintain lender confidence, and reinforce discipline throughout the lending relationship.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.