2 min read
Definition
A margin call occurs when the value of collateral backing a facility falls below the agreed threshold and the lender demands additional cash or security to restore the margin.
In plain terms
If the assets securing your loan drop in value, the lender wants the shortfall made up — usually fast. It can force cash out exactly when markets are already stressed.
Why it matters for your company
Facilities marked to market or tied to volatile collateral carry margin-call risk. Understand the triggers and keep a cash reserve for them. See mark to market.
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