Understanding the Unguaranteed Loan Portion Amount in Financial Law
Definition & Meaning
The unguaranteed loan portion amount refers to the total payments owed on a Private Loan Portion that are not covered by a Guaranteed Loan Portion. In simpler terms, it includes all amounts that borrowers must repay that are not backed by a guarantee from a government entity. This definition is important in the context of loans related to foreign military sales and financing, as it helps clarify which parts of the loan are at risk if the borrower defaults.
Legal Use & context
This term is primarily used in financial and legal contexts related to military financing and loans. It is relevant in areas such as:
- International finance
- Government contracts
- Loan agreements
Understanding the unguaranteed loan portion is crucial for parties involved in foreign military sales, as it outlines the financial responsibilities that are not protected by guarantees. Users can manage related forms and agreements using templates provided by US Legal Forms, which are drafted by licensed attorneys.
Real-world examples
Here are a couple of examples of abatement:
Example 1: A company borrows $1 million for a military equipment purchase. The government guarantees $700,000 of the loan. The unguaranteed loan portion amount would be $300,000, which the company must repay without government backing.
Example 2: A borrower takes out a loan for $500,000, with $200,000 guaranteed by a federal agency. The unguaranteed loan portion amount is $300,000, which poses a higher risk to the lender. (hypothetical example)