In such a scenario, the government authority may act as a junior lender, the financial (s) as a priority lender and the company (Y) as a borrower. Since the company provides credit to the two financiers with the same property, the senior creditor will in any event want to enter into an intercreditor agreement with the government authority in order to protect its interests. A security agreement reduces the lender`s risk of default. A common guarantee agreement can be defined as a legal agreement reached when a common group of syndicated lenders borrows funds from a common debtor on the basis of guarantees provided by a common guarantee. This common guarantee is pledged by a potential debtor and the amount of funds spent by the lenders` consortium is agreed on the basis of the total value of the common guarantees in the context. Businesses and people need money to manage and finance their business. There are few cases where companies can self-finance, which is why they go to banks and other sources of capital investment. Some lenders demand more than good payments of words and interest. That is where security agreements come in. These are important documents between the two parties at the time of the loan.

In many inter-credit agreements, it is often common for the chief lender to dictate the terms of the pledge. However, in cases where a junior lender is not trading hard, the senior lender may disadvantage a junior lender. In some cases, a junior lender may face artificial delays on the part of the primary lender to seek authorization to enter into an agreement or right. Such an approach can thwart the process and force the junior lender to capitulate. A senior debt credit agreement consists of sensitive issues, such as interest charges, costs and allowances, which favour the priority lender over junior lenders. It is also common for a primary lender to be able to modify them without the consent of a junior lender. Therefore, a junior lender should negotiate a cap on the amount of priority debt and ensure that there is a clause preventing the priority lender from changing the terms of the priority loan. In order for a security interest to be attached to the security held by subsequent buyers, it must be perfected.

If the security contract for a security purchase is of interest to consumer products, perfection is automatic. Otherwise, the lender must register either the agreement itself or a UCC-1 funding declaration in an appropriate public place (usually the Secretary of State or a public enterprise commission under that person`s control). The enhancement of interest creates constructive communication, considered legally sufficient to inform the rest of the world of the lender`s rights over guarantees. When a borrower has used the same property as the guarantees for several guarantee agreements with different lenders, the first lender to register the interest is most entitled to that property. The junior lender should consider meeting the contractual terms for the project in the event of a delay in payment from the borrower. In the event of such a situation, the junior lender should be aware that there are usually only two options: either to inject funds into the project, to remedy financial defaults under the senior lender, or to pay the priority lender.