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IF YOU need a cash injection for your business to help with growth costs, or to fund the purchase of equipment, then you will need to think carefully about the finance options open to you and their potential pros and cons.
As with most things in life, the devil is in the detail when it comes to commercial finance and it is vital that once you have identified your preferred funding provider and cleared their corporate credit checks, you consult a lawyer to advise you on the terms of the proposed arrangement.
As Anna Horrell pictured left, commercial lawyer with Borneo Martell Turner Coulston explains, ‘It is important that wherever possible you seek advice at an early stage. As soon as you receive confirmation of the key terms on which finance is proposed, you will only have a short window of time to try to renegotiate any provisions.’
Types of commercial finance
The nature of the agreement you will have to enter to secure funding will depend on the type of commercial finance arrangement you have decided to go for.
For example, an agreement which sees you secure working capital finance under the terms of an overdraft will be very different from an agreement in which you gain access to a one-off lump sum, under a commercial term loan or a mortgage arrangement.
Our experienced commercial finance lawyers can help you to understand the intricacies of the type of arrangement you are proposing to enter and provide reassurance that you have selected the most appropriate facility to meet your needs.
Terms and conditions
While most finance agreements will contain a set of fixed provisions that reflect standard industry practice, they will also usually contain a number of bespoke clauses designed to meet your own particular needs and to ensure the funder is adequately protected against your assessed risk profile. It may be possible for you to renegotiate some of these bespoke provisions, but only if you begin a dialogue with the funder at an early stage.
Security
In many cases where commercial funding is required, the provider of the finance will insist on some sort of security being given for the amount loaned. Sometimes the requirement will be for a commercial mortgage over property or land, and sometimes it will be for a legal charge to be granted over business assets, machinery, or equipment.
The key when reviewing security requirements, is to ensure that the proposed arrangement is workable and that you do not enter into an agreement which will effectively restrict your ability to run your business as you see fit.
Contact us
To find out more, contact Anna Horrell on 01604 622101 or email .
This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.
