How does a loan work?

The properties of the loans differ between different investments. It is therefore important that the investor carefully study the investment material and the debt certificate, including general terms, to understand how the loan works and what capacity they have in the company.

However, loans can generally be described as follows:
A loan has a borrower (project owner), possibly one or more guarantors and/or mortgage planners and a maximum of 200 lenders. In addition to these parties, a loan agent is charged with the task of monitoring the interests of the lenders and representing them to the borrower. The total amount of the lenders amounts to the loan amount and all lenders have a proportionate right to any mortgage or other collateral linked to the loan.

In order to facilitate decisions, communication and to ensure that all lenders' interests are met as much as possible, all borrowers will transfer a large part of their influence over the loan to a loan agent. This means that it is the agent that exclusively represents all lenders to the borrower in all essential respects, such as no repayment, realisation of any mortgage, etc. Also, note that the lender's obligation to act against the borrower requires certain majority decisions by the lenders and that lenders guarantee the lender's costs and fees. The exact terms and conditions are stated in the bond and its general terms and conditions.

Return to frequently asked questions