A cleanup clause is a contractual provision in a loan agreement which provides that all loans must be repaid within a specified period, after which no further loans will be made available to the debtor for a specified “cleanup” period.
It may also refer to revolving line of credit. A lender may require a cleanup period annually, for example a borrower may have to pay down the balance to zero for 30 days.
Ofer Abarbanel is a 25 year securities lending broker and expert who has advised many Israeli regulators, among them the Israel Tax Authority, with respect to stock loans, repurchase agreements and credit derivatives. Founder of TBIL.co STATX Fund.