Before entering into a commercial loan agreement, the borrower first decides on his affairs concerning his character, his creditworthiness, his cash flow and all the guarantees he must put in collateral for a loan. These presentations are taken into account and the lender then determines the conditions under which they are willing to advance the money. After reading the credit contract correctly, Sarah accepts all the terms described in the agreement by meaning it. The lender also signs the credit agreement; after the signing of the agreement by both parties. Lenders fully announce all the terms of the loan in a credit agreement. The important credit terms included in the credit agreement include the annual interest rate, the application of interest on outstanding balances, all account-related fees, the duration of the loan, payment terms and possible consequences for late payments. Institutional credit transactions also include revolving and non-renewable credit options. However, they are much more complicated than retail agreements. They may also include the issuance of bonds or a credit consortium when several lenders invest in a structured credit product. „Investment banks“ establish loan contracts that meet the needs of the investors they want to attract funds; „Investors“ are still highly developed and accredited organizations that are not subject to bank supervision and the need to respect public trust. Investment banking activities are overseen by the SEC and the focus is on whether the parties providing the funds are properly or properly disclosed. A credit contract is a legally binding contract that documents the terms of a loan agreement; it is carried out between a person or party lending money and a lender. The credit contract describes all the terms and conditions of the loan.

Credit agreements are established for both retail and institutional loans. Credit contracts are often required before the lender can use the funds made available by the borrower. For commercial banks and large financial firms, „loan contracts“ are generally not classified, although „loan portfolios“ are often subdivided into „personal“ and „commercial“ loans, while the „commercial“ category is then subdivided into „industrial“ and „commercial real estate“ loans. „Industrial“ loans are those that depend on the cash flow and solvency of the company and the widgets or services it sells. Commercial home loans are those that pay off loans, but this depends on the rental income paid by tenants who lease land, usually for long periods of time.