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Finance agreements

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Joanna Convey

Solicitor

Commercial law

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Are you raising finance or changing your banking facilities?

Have you been asked to enter into a personal guarantee?

The main aim of any finance arrangement is to obtain funding on the most favourable terms possible. Financing your business can include borrowing money directly from a financial institution such as a bank, asset finance, or raising money through debt or equity finance. The appropriate type of arrangement will largely depend on the amount of money to be raised; the purpose for which the money is required and the stage and particular requirements of your business.

Banks

Obtaining a bank facility can be more difficult. Banks and other financial institutions often ask for complicated facility arrangements and security to be put in place.

Increasingly financial institutions are asking directors and their partners to enter into personal guarantees to secure their position. It is vital that you and your spouse take separate independent legal advice prior to entering into personal guarantees.

Equity

You may be considering raising finance from private investors who choose to invest in your company in return for an equity stake. This could be from a “business angel” – high net worth individuals acting on their own or as part of a syndicate with others. Another option is a private equity house that may be a VCT (venture capital trust) or ECF (enterprise capital fund). These entities invest in higher risk private companies. The investor will require a shareholders’ agreement or other company documentation which will need to be reviewed carefully, as you may be losing control of your own company.

Asset finance

Other arrangements available include asset finance where a lender takes a charge over a specific asset, for example a property or machinery. The asset finance agreement should be reviewed carefully. The asset finance agreement may also be backed by a personal guarantee.

Whether you are raising a small amount of capital or planning to secure funding through debt or equity finance, the experienced team of corporate lawyers at Myers & Co can advise on the appropriate type of funding for your business and assist you in negotiating the key terms and conditions of the funding.

Based in Stoke-on-Trent, Staffordshire, our commercial lawyers have a reputation for providing accurate advice, and dealing with complex problems in an efficient manner.   To find out more, contact us on 01782 577000.

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