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What is meant by acceleration?

The term ‘acceleration’, in the context of a loan, refers to the declaration (usually by notice) by a lender (or lenders in a syndicated facility), that the loan (and certain other borrower liabilities under the loan) must be repaid early, ie before the agreed repayment date.

The lender(s) will typically only be permitted to demand early repayment of a loan under certain circumstances. These will be set out in the loan agreement and are termed ‘events of default’.

The acceleration clause is typically located after the list of events of default in a loan agreement and should be reviewed carefully to determine what rights the event of default has given the lender(s).

Events of default often give rise to other consequences under facility documentation—eg a drawdown request cannot normally