Negotiating The Terms Of A Loan Agreement
Our solicitors are vastly experienced in assisting companies of all sizes to facilitate and advise upon the negotiations involved in agreeing to the terms of a loan agreement. At Blackstone Solicitors, we are able to advise many different types of client on the process involved, no matter the complexity of the circumstances being considered.
For more information about how our team of corporate solicitors can help in the negotiation process, contact us on 0345 901 0445 or complete our online enquiry form and a member of the team will call you back at a convenient time.
A loan agreement is a document in which a lender – usually a bank or other financial institution – sets out the terms and conditions under which it is prepared to make a loan available to a borrower. Although a lender will often insist upon its “standard terms”, there are often opportunities to enter into negotiations in order to obtain a more favourable deal.
Blackstone Solicitors are known for our efficiency, attention to detail and ability to get things done; qualities much needed when negotiating loan terms. We will provide professional, pragmatic advice based on our years of experience in this specialist area.
Our team will do all that is necessary to ensure you are properly and robustly represented in any negotiation and will put your interests first at all times. Negotiating the terms of a loan agreement can be highly technical and can sometimes involve different areas of law and regulations; we can advise on all these areas and make sure you are in the best possible position for a successful outcome.
Why Legal Help is Important
It should be remembered that entering into a loan agreement can take place in companies of any size and in any industry.
The process can be complex, potentially stressful and can be considered to be
incredibly important. It can have an impact on you and your business, both in the short and long term – it is therefore imperative that you have the best legal experts at your side, not only to ensure everything progresses as it should, but also to make sure both you and your business benefits from the best possible terms of any loan agreement.
Before entering into the negotiation process, it is important to consider what consents will be required. For example, the approval of shareholders may be required for the taking out of a loan and granting of some form of security. If other security has previously been granted this may contain negative consents which prohibit further security from being granted without prior consent. Further, it is imperative that all the directors agree with any loan being taken.
Once you have decided upon who you will be borrowing money from, the type of facility and obtained any necessary consents, the main terms of the agreement should be set out in a document called a Facility Letter. This document will set out, amongst other things, key terms such as the amount of the loan, interest rate, repayment date and early repayment fees.
Before the Facility Letter is signed, it is vital that you have legal representation to ensure nothing untoward or unusual is included in the agreement. Once a provision is included in a signed term sheet, it will be harder to negotiate away when it comes to negotiations on the final binding documents. Most of the term sheet will not be legally binding (allowing the bank to withdraw their original funding offer). However, some terms, such as costs and confidentiality, will be in force from the signature.
Although loan arrangements can be expedited, the process will often take longer than the borrower first thinks so it is essential that you are realistic in how long the whole process can take. Further, banks will inevitably try and have any arrangements drawn upon their standard terms which will inevitably be in favour of the bank.
In terms of security, the bank will often try and obtain as much security for the loan as possible. They often assist with personal guarantees from directors and/or shareholders. This can be above and beyond a charge against unencumbered assets. Directors should try and limit security to the assets of the borrower, as otherwise, this negates the point of operating the business through a limited company in the first place. However, this is often easier said than done but there are ways to reduce any associated risks.
Whatever the circumstances are of the loan agreement, we ensure full compliance with corporate laws and regulations, so that you can be sure that the process is addressed on a firm financial and legal basis.
We will work with you to ensure all financial, tax and legal aspects of any proposed agreement is properly managed. We are able to assist with any aspect of this and will guide you through the technicalities in a clear and concise way. We have a team of experienced solicitors well versed in the process who are ready to assist you.
Get in Touch
Find out more about our services and how our corporate solicitors can assist you and your business by getting in touch. We have offices in Cheshire and London and are able to serve clients across the North West, including Chester and Manchester, as well as throughout the UK and also overseas.