When a business seeks finance from a bank or an investor there is usually a requirement to sign a loan agreement which sets out the value of the loan and the terms and conditions of re-payment or an investment agreement setting out the terms that the investor requires.

In a nutshell, our role is to negotiate and document the contractual relationship between these lenders, investors and borrowers, and to ensure that our clients’ best legal and commercial interests are reflected in the terms of loan agreements.

These documents very often comprise several pages of terms and conditions in jargon that can be difficult to comprehend. It is our role to read all this small print and explain to you in plain English so that you as our client fully understand what you are agreeing to and their impact is considered before signing the agreement.

In the majority of cases, we are acting on behalf of the business owner, although we have also acted on behalf of funders.

A banking and finance lawyer who works on behalf of a business seeking to borrow money from a bank or private investor plays a crucial role in facilitating and ensuring the legal aspects of the financial transactions are met.

Here are the key responsibilities and tasks typically associated with our role:

  • Legal Advice and Due Diligence: Provide legal advice to the business on various financing options available, including loans, credit facilities, and debt issuance. Conduct due diligence to assess the legal risks and implications of the proposed financial transactions.
  • Drafting and Reviewing Documentation: Prepare and review legal documents related to the financing, such as loan agreements, security documents, and guarantees. Ensure that the terms and conditions of the financing align with the business’s objectives and comply with relevant laws and regulations.
  • Negotiation: Negotiate the terms of the financing with the lending institution or private investor on behalf of the business. Work to secure favourable terms and conditions, including interest rates, repayment schedules, covenants, and collateral requirements.
  • Regulatory Compliance: Ensure that the financing arrangement complies with all applicable regulatory requirements and financial laws in the UK. Stay updated on changes in financial regulations that may impact the transaction.
  • Security and Collateral: Advise on and structure the security package for the financing, which may include assets, shares, or other forms of collateral. Register security interests with relevant authorities to protect the lender’s rights in case of default.
  • Closing the Transaction: Coordinate and facilitate the closing of the transaction, ensuring that all necessary documents are executed and delivered by the parties involved. Oversee the transfer of funds and the fulfilment of any conditions precedent to the financing.
  • Dispute Resolution: Provide guidance in case of disputes or breaches of the financing agreements, working to resolve issues through negotiation or, if necessary, through legal proceedings.
  • Ongoing Support: Offer ongoing legal support throughout the life of the financing arrangement, including amendments, refinancing, and restructuring as needed.
  • Risk Management: Identify and manage legal risks associated with the financing, advising the business on strategies to mitigate potential challenges.
  • Client Communication: Maintain open and transparent communication with the client, keeping them informed about legal developments, risks, and the progress of the financing transaction.

In summary, as your banking and finance legal advisor, we are your advocate – ensuring that transactions are legally sound, compliant, and aligned with your strategic goals.

If you would like us to play a vital role in managing your legal risks and facilitating the smooth execution of your next financial transactions, please get in touch.