Acceleration Clause
Private Equity glossary · Private Equity Fundamentals
Definition
A debt provision that allows the lender to demand immediate repayment of the full balance upon a covenant breach or other event of default.
Acceleration Clause in plain English
An acceleration clause is a line in a loan agreement that lets the lender say 'the whole balance is due right now' instead of waiting for the normal schedule — but only if the borrower breaks a rule (a 'covenant') or trips some other default trigger. Its real purpose is protection: it turns a slow-motion problem into an immediate one, forcing everyone to the table before things get worse. It's like a phone plan that says if you miss a payment, you don't just owe this month — the entire remaining contract comes due at once, which is exactly why borrowers work hard not to slip.
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