Corporate loans legal advice

We offer comprehensive legal advice and services related to corporate loans and borrowing. Our experienced lawyers help clients navigate the complexities of securing financing, ensuring client borrowers are protected, lender stringent requirements are addressed and key risks elements are negotiated.

Specifically, we help corporate clients by :-

• Reviewing and negotiating loan agreements and security documents - We'll ensure your rights are protected, and the terms are as favourable as possible for your business.

• Advising on financial covenants - we'll identify and mitigate potential risks and help you understand the risks associated with events of default and financial covenants, avoiding potential pitfalls.

• Dealing proactively with lender legal due diligence lender lawyers requirements - ensuring that your transaction completes efficiently and as quickly as possibly.

Conduct Rigorous Due Diligence: , providing you with peace of mind.

Types of Corporate Loans we advise on

• Term Loans - loans with fixed repayment terms and interest rates.

• Revolving Credit Facilities - lines of credit that allow businesses to borrow and repay funds as needed.

• Asset-Based Financing - loans secured by the borrower's assets.

• Syndicated Loans – where a loan is provided by a group of lenders.

• Private Equity - Investments made by private equity firms in exchange for equity in a company can often include loans as part or all of the investment, typically in the form of convertible loans.

• Inter company loans

• Debt Restructuring and/or refinancing - If your business is facing financial difficulties, we can help you negotiate debt restructuring arrangements or refinancing your existing loans with your lenders.

• Director loans

Our services and experience

• Negotiating key terms – we identify the key risks such as events of default, warranties and cross default and ensure clients are fully briefed on key terms and potential risk areas.

• Due diligence – often in conjunction with your accountants we carry out the necessary work to satisfy the lender’s legal team enquiries and due diligence demands.

• Security documentation – we draft and/or review the legal and security documents, such as loan agreement, fixed charges and/or floating charges and ancillary documents.

• Financial covenants – we ensure you understand the financial covenants in the loan documentations, compliance obligations and implications of any breaches.

Some of the key legal risks

These include :-

• Default Risk - failing to meet its obligations under the loan agreement, leading to potential losses for the lender.

• Credit Risk - the borrower's financial condition deteriorates, making it less likely to repay the loan. Especially risky where there are financial covenants that give the lender rights based on pre-set financial performance criteria.

• Market Risk: Economic downturns or changes in interest rates can affect the borrower's ability to repay the loan.

Types of Security for corporate loans

• Fixed charge - charge over specific assets (e.g. property, machinery or equipment).

• Floating charge - also known as a debenture. Where the lender takes security over all or part of a company's assets, allowing the lender to take possession of them if the borrower defaults.

• Personal guarantee - from an individual (e.g., a director or shareholder) to repay the loan if the company defaults.

With commercial loans, the lender will often demand the security it requires and may not be willing to negotiate. Notwithstanding this, it's important to carefully consider the pros, cons and risks of each type of loan and security before making a decision.

Our lawyers can ensure you are fully briefed.

Key Clauses in Loan Agreements

Loan agreements typically include the following key clauses :-

• Principal Amount - the amount of money being borrowed.

• Interest Rate - the rate at which interest will accrue on the loan.

• Repayment Schedule - terms and conditions for repaying the loan, including the frequency and amount of payments.

• Security - if the loan is secured, the assets that will be used as collateral.

• Default Provisions - consequences of failing to comply with the terms of the loan.

• Governing Law - jurisdiction that will govern the loan agreement.

Supporting legal and financial documents

• Financial statements - the borrower's balance sheet, income statement, and cash flow statement to satisfy the borrower about the company's financial health.

• Tax returns - so the lender can assess the company's compliance, profitability, financial stability and that there are no obvious red flags.

• Management accounts - regular reports providing a fairly up-to-date view of the company's financial performance.

• Board resolutions - resolutions which will need to be passed by the company's board of directors authorising the loan.

The specific ancillary documents required for a corporate loan will depend on the lender's requirements and the nature of the loan. It's essential to consult with a legal professional to ensure that all necessary documents are in place.