A secured demand loan facility is a provision under which a business organization can avail business loans from a financial institution to meet its immediate and long term liquidity requirement. It is a very common debt instrument under which the organization has to securitize the loan by pledging an asset with the institution before availing the loan such as a real estate asset, stocks or shares or some other acceptable asset. Moreover the secured demand loan facility is not sanctioned for a specific time period and can be called for repayment by the creditor at any point of time they deem it to be fit.
The interest rates in this type of facility are also not fixed and fluctuate in correlation with the prime lending rate.Therefore before entering into such an arrangement the creditor should carry out a detailed valuation of the debtor and all terms and conditions and rights of both the creditor and debtor should be clearly articulated and documented to avoid any future issues and conflicts.
Secured Demand Loan Facility
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