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It is a probability of loss because of the borrower's failure to satisfy a debt or repay a loan quantity. Furthermore, it is a risk for the lender as They might not acquire the first principal and desire total.
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The independent creditors can even give loans to Salvatore and Sons for further funding. Consequently, Salvatore and Sons will experience insolvency in case of project failure, but Salvatore Oil (project sponsor) will not be answerable for the former’s personal debt repayment.
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