Demand features. Material adverse change clauses. Quarterly covenants with no cure period. Personal guarantees that capture you and your spouse. We inspect every clause, label what is structural, and flag what is going to crack under load.
Most Canadian SMB operating lines are demand facilities. The bank can call the loan at any time on as little as 10 days' notice under the BIA. Most owners do not realize this until a relationship manager turns over or the bank changes its sector view. Plan your cash position assuming the line could be pulled.
MAC clauses give the bank discretion to declare default for events that, in their opinion, materially affect the borrower or the security. No threshold, no cure, no third party. The clause exists to give the bank optionality. Negotiate it to require a quantifiable trigger and a reasonableness standard.
Standard SMB facilities require unlimited personal guarantees from each owner, joint and several. Spousal acknowledgements pull the spouse into the security chain, especially if personal real estate is collateral. The $500K business facility is effectively a personal undertaking against your homes and your family.
Financial covenants tested quarterly with no cure period turn an off quarter into an event of default, which triggers the demand feature, which cascades into cross-default with other facilities. Negotiate cure periods, trailing averages, and carve-outs for one-time non-cash items before signing.
Commitment letter, term sheet, GSA, personal guarantee schedule. PDF only. No account, no login, no sales call.
Demand features, MAC clauses, covenants, guarantees, cross-default — cross-referenced, ranked by severity, tied to section numbers.
Plain-English report. Take it to your banking lawyer or your CFO. Walk into the negotiation with the right asks ready.
The operating line is repayable on demand. The bank can require full repayment at any time, with or without cause on as little as 10 days' notice under the BIA. Standard, rarely understood by SMB owners.
Default includes any event that, in the bank's sole and reasonable opinion, materially affects the borrower. No quantifiable trigger, no cure period, no third-party determination.
Owners' guarantees are unlimited, joint and several, and survive termination of the facility. Spousal acknowledgement required for any personal real-estate collateral.
We are running the first batch of facility-letter inspections at no cost while we calibrate the standard. You give us an email; we give you the report. A banking lawyer review still runs $1.5K to $4K and is worth every dollar — inspection makes that conversation 30× cheaper to start.
Delivered after analysis. Print and PDF-friendly.
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