Accommodation endorsement definition

What is an Accommodation Endorsement?

An accommodation endorsement is a written acknowledgement that an entity will be liable for an obligation. The entity enters into this commitment despite not receiving any consideration. This endorsement is normally given in order to assist a related party in obtaining financing, such as when a corporate parent is assisting a subsidiary in obtaining financing from an outside party.

Example of an Accommodation Endorsement

As an example of an accommodation endorsement, a corporate parent acknowledges that it will pay a loan if the subsidiary applying for the loan is unable to pay it. Or, a parent guarantees the lease payments of a child, so that the child can enter into a lease agreement for an apartment. As a result, the creditworthiness of the party receiving this benefit is enhanced.