Cash Deficiency Agreement

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Cash deficiency agreement

An agreement to invest cash in a project to the extent required to cover any cash deficiency the project may experience.

In project finance, especially construction, an agreement in which one party provides the other up to a certain amount so that the second party may temporarily alleviate its cash flow problems until it becomes profitable. This especially applies to a situation in which one or more of the second party's products are not selling as well as expected. This agreement allows the borrower to service its debt without risking default.

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