Standby Fee
What is a Standby Fee? Standby fee is a term used in the banking industry to refer to the amount that a borrower pays to a lender to compensate for the lender’s commitment to lend funds. The borrower compensates the lender for guaranteeing a loan at a specific date in the future. In exchange, the...
Negative Covenant
What is a Negative Covenant? A negative covenant, also known as a restrictive covenant, is a covenant that restricts one party from carrying out certain actions. Sometimes the agreement involves some form of compensation to the party that consents to the restriction. Negative covenants are considered legal, but some of their provisions have been found...
Non-Conforming Loan
What is a Non-Conforming Loan? Non-conforming loans are loans that don’t check all the boxes necessary for the bank to fund them. There is a long list of potential reasons why a non-conforming loan may not meet all the traditional loan criteria, including the following: Insufficient credit With mortgage loans, the loan amount is higher...
Hard Money Loan
What is a Hard Money Loan? A hard money loan is a type of financing that a borrower receives with physical property used as loan collateral. The loan – most often issued by private investors or non-bank financial companies – is typically used to provide relatively short-term financing. Hard money lenders expect to see their...
Priority Sector Lending Certificates (PSLCs)
What are Priority Sector Lending Certificates (PSLCs)? Priority sector lending certificates (PSLCs) are certificates that are issued against priority sector loans for banks. They allow banks to meet their targets and sub-targets – when it comes to priority sector lending – by buying the instruments. The banks use PSLCs to guard against shortfalls. The lending certificates...
