acceleration clause investment & finance definition
A clause in a loan agreement that can be invoked by
the lender when the borrower fails to make payments, files bankruptcy, or
otherwise breaks a loan agreement. The clause allows the lender to demand that
the borrower pay the outstanding loan balance or provide additional collateral.
See acceleration clause in Wall Street Words
A provision in a bond indenture that in the event of default allows the trustee or the holders of 25% of the principal amount of the outstanding issue to declare all of the principal and interest immediately. Calling for an acceleration is likely to cause the borrower to cure the default or seek bankruptcy protection.
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