What is an Accommodation Endorsement?
Accommodation endorsement is a written agreement between the two persons or entities about sharing obligation for a liability. This endorsement always increases a person or an entity’s creditworthiness to secure a loan. Often holding companies provide accommodation endorsement to subsidiaries to get a loan.
Example of an Accommodation Endorsement
Accommodation endorsements are helpful for small companies. Often small companies could not manage a loan due to less creditworthiness. Here parent company can come forward and sign an accommodation endorsement to ensure that the obligation will be paid by the parent company if the subsidiary defaults. By this small companies can enjoy the credit rate of the parent company.