What is an Accommodation Paper?
As a document that ensures the repayment of funds extended to a borrower, an accommodation paper can make the process of obtaining loans and other forms of financial support much easier, even if the borrower is experiencing temporary financial problems. Here are some basic facts about accommodation papers, including a few examples of how they can make a big difference to both the lender and the borrower. Functioning as a negotiable instrument that can be used to secure financing, the accommodation paper allows a third party to ensure a lender that the resources extended to the borrower will be repaid. This third party is often referred to as the accommodation party. Essentially, the accommodation party is committing to repaying the loan if the borrower defaults on the payments for any reason. In some cases, the accommodation paper may outline an escalation list of procedures that will be followed before the lender contacts the accommodation party with a demand for payment. In other sce
” As a document that ensures the repayment of funds extended to a borrower, an accommodation paper can make the process of obtaining loans and other forms of financial support much easier, even if the borrower is experiencing temporary financial problems. Here are some basic facts about accommodation papers, including a few examples of how they can make a big difference to both the lender and the borrower. . Functioning as a negotiable instrument that can be used to secure financing, the accommodation paper allows a third party to ensure a lender that the resources extended to the borrower will be repaid. This third party is often referred to as the accommodation party.
