Springing lockbox arrangement

A springing lockbox arrangement requires the use of a lender-controlled deposit account only when there is a triggering event, such as a loan default by a borrower or the failure of a debt-service ratio. At that point, the account is set up and payers are notified to send their payments to the lockbox.

This trigger provides the lender with some security, since it then has direct access to the borrower's cash flows. In addition, there are no periodic costs associated with this option, until the account is created.

Related Courses

Corporate Cash Management