Commercial Financing – Private Equity or Financial Institutional Funding
Does your business require a capital infusion or seed financing? Perhaps you need a a bank loan or line of credit (LOC) to acquire a new business or you want to purchase new equipment or inventory for your existing business. You may already be in talks with a major financial institution or private equity funds regarding commercial financing.
Most large financial institutions and lenders require you to obtain independent legal advice before you sign the loan documentation. The loan will likely require a variety of General Security Agreements (GSA), personal guarantees and Personal Property and Security Act (PPSA) registrations against your business or personal assets. The lender may even require registration against real property in the form of a collateral secured home line of credit or second mortgage on your corporate or residential real property.
Why Do You Need a Lawyer?
These financing and security documents must be reviewed by counsel in order to identify the rights and obligations of each party and inform you of the risks and benefits of the loan. You may want to know how you exit or what happens if you default on a payment.
We can help. Our strategic advice and recommendations regarding the structuring of transactions helps minimize risks for both institutional and private lenders. We also advise borrowers on their individual financing requirements, negotiate terms of loans and security documents, and seamlessly facilitate financing transactions between lenders and borrowers.
With years of experience in commercial transactions, Kalfa Law Firm is your perfect partner for all your business and financing needs.
Need to borrow or loan funds? We’re Here to Help™
F.A.Q’s:
Seed Funding is also referred to as Seed Capital or Seed Investment. It is the first round of funding a company goes through. The purpose of this round of funding is to make the company look attractive enough to investors to secure more funding in the future.
There are several possibilities for a business start up to get seed funding, other than family or friends.
They include the following:
- Angel Investors: Accredited investors with high net worth and who wish to diversify their portfolios by investing in start-ups.
- Accelerator Programs- An accelerator is a fixed-term program designed to help select ventures grow through their nascent stages, usually ending with an event where the ventures showcase their product or service to investors. The role of an accelerator is to help startups design products or services, identify target markets, and obtain resources like capital and employees. A key component of an accelerator program is its short duration. In as little as three months, an accelerator is pressured to reach a stage that produces a viable product or service.
- Incubators- An incubator is a company that helps startups for undetermined periods of time, providing space to work and capital to use.
A GSA will secure a loan for the party who signs it, by including the debtor’s representations, warranties, and covenants; a description of the personal property assets secured by the GSA; the terms and conditions of the GSA; and enforcement rights in the event of a default. Most financial institutions have their own preferred GSA form.
The PPSA is based on a system where all security interests are registered, letting others parties know that the lender has rights over certain properties of the lender. A security interest is a right that a lender to take over certain property of the lender if the lender goes into default. When considering lending money to or going into a business with another party, it is advisable to search the PPSA, a searchable database to find out if the party has property that is free and clear of any third-party rights.
