Interest Capitalization Clause Samples
The Interest Capitalization clause defines how unpaid interest is added to the principal balance of a loan or financial obligation. In practice, this means that if interest payments are not made when due, the accrued interest is incorporated into the outstanding principal, and future interest is then calculated on this higher amount. This clause is commonly applied in loan agreements, especially during periods of deferment or forbearance. Its core function is to ensure that lenders are compensated for deferred interest payments, while also clarifying how the total debt owed by the borrower may increase over time due to capitalization.
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Interest Capitalization. Subject to the consent of the Parties the accrued Note Interest may be capitalized on each interest due date. Upon capitalization, the aforesaid Note Interest shall be deemed to become part of the Note Principal.
Interest Capitalization. The Creditor and the Debtor hereby record that on April nine of this year two thousand nineteen, they agreed to capitalize part of the interest accrued on the Loan that corresponded to be paid on said date, which is the reason why this instrument is intended to materialize said agreement, amending the Loan Agreement according to the terms set out herein, also incorporating said capitalization in the Loan instruments, as indicated in the following Clauses. /One.
Interest Capitalization. When delinquent interest is so treated as principal, the new principal amount may exceed the line of credit listed herein, but may not exceed statutory loan limits. The new principal amount and new guaranteed portion will be identified at restructuring in an addendum to this agreement. Such capitalized interest will be covered by this Assignment Guarantee Agreement. References to principal and interest herein, therefore, shall include any capitalized interest on the guaranteed portion of the loan resulting from the restructuring of a Farm Credit Programs loans and not exceeding statutory loan limits.
Interest Capitalization. (a) Accrued interest on each Loan shall be payable in cash on the dates provided for in Sections 3.2.3(c), (d) and (e) (each an “Interest Payment Date”). However, on each Interest Payment Date occurring on or before the third anniversary of the Closing Date only, (i) with respect to Loans other than Term C Loans, the Borrowers shall have the right, which may be exercised solely in their discretion, but subject to Section 3.2.4(b) below, in lieu of paying interest on the Loans otherwise payable in cash on such Interest Payment Date, to capitalize (at the option of the New Borrower), by increasing the outstanding principal amount of each such Loan on and as of such Interest Payment Date (and thereafter shall constitute additional principal of such Loan for all purposes, including the accrual of interest), with any such capitalization effected on a pro rata basis as between all such Loans then outstanding in accordance with the principal amount of each such Loan and the interest otherwise due and payable thereon (A) up to 100% of the interest otherwise due and payable on such Loans on any Interest Payment Date that occurs on or prior to the second anniversary of the Closing Date and (B) up to 50% of the interest otherwise due and payable on such Loans on any Interest Payment Date that occurs after the second anniversary of the Closing Date and on or prior to the third anniversary of the Closing Date; provided that no such election under this clause (i) may be made on any such Interest Payment Date if, after giving pro forma effect to such interest election, the New Borrower and its Subsidiaries would have $50,000,000 or more in Liquidity; and (ii) with respect to Term C Loans the Borrowers shall have the obligation, in lieu of paying interest on the Loans otherwise payable in cash on such Interest Payment Date, to capitalize, by increasing the outstanding principal amount of each Term C Loan on and as of such Interest Payment Date (and thereafter shall constitute additional principal of such Loan for all purposes, including the accrual of interest), with any such capitalization effected on a pro rata basis as between all Term C Loans then outstanding in accordance with the principal amount of each such Term C Loan and the interest otherwise due and payable thereon, 100% of the interest otherwise due and payable on such Term C Loans on any Interest Payment Date that occurs on or prior to the third anniversary of the Closing Date. In the event that accrued inte...
Interest Capitalization. When delinquent interest is so treated as principal, the new principal amount may exceed the line of