Accommodation loan

Definition:

A legal agreement signed by two parties whereby one of the co-signers guarantees credit liability for the other co-signer. Accommodation loans, often called accommodation endorsements or bills, allows the guarantor to add strength to the creditworthiness of the other party. If the receiving party defaults on its debt, the guarantor is then responsible for the debt of the other party. See: Covenant

Investing Essentials


Copyright © 2011 Campbell R. Harvey, Professor of Finance, Fuqua School of Business at Duke University

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