Accordion Feature

外汇网2021-06-19 20:53:19 72

A type of option that a company can buy that gives it the right to increase its line of credit or similar type of liability with a lender. Companies typically purchase an accordion feature in anticipation of the need for more working capital for possible expansion opportunities.

|||For example, suppose company ABC has established a $100,000 line of credit with the Bank of XYZ. Company ABC has also purchased an "accordion feature" that would let it increase its total debt commitment of $100,000 to $150,000 because Company ABC believes that it will need an additional $50,000 if it decides to add a new sales pision.

This term's origin is derived from how an accordion can be pulled and stretched in a manner that lengthens its total size.

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