Commercial finance—loans that business entities take out—is a critical tool in the business world. It gives companies the resources to expand, innovate, and succeed in competitive markets.
Whether you are a lender structuring complex financial products or a borrower seeking funding for growth, experienced legal counsel is essential. Berluti, McLaughlin & Kutchin LLP, (BMK) stands out in Boston for delivering unparalleled guidance in commercial finance law. Our commercial finance attorneys combine technical expertise with practical solutions, ensuring every transaction is seamless and secure.
What Is Commercial Finance Law?
Commercial finance law covers many financial services that enable businesses to access capital. With the capital obtained through commercial finance, businesses can support their operations, expand into new markets, and explore unique opportunities.
Commercial finance attorneys play a vital role in negotiating and facilitating commercial finance transactions. These transactions are often complex, requiring careful planning, attention to detail, and extensive legal knowledge. Yet, well-structured agreements can empower businesses to achieve their goals while avoiding significant risks.
Types of Commercial Financing
There are many types of commercial financing. Which type is right for your business depends on what you’re trying to finance and how much flexibility you need.
Term Loans
Term loans, like mortgages, involve borrowing a specific amount of money you repay over a set period. You typically pay the loan off in regular installments. Established businesses looking to finance large-scale projects or long-term investments often use term loans.
Lines of Credit
Lines of credit help businesses manage cash flow and meet short-term financial needs, especially small to mid-sized businesses that need liquid assets for things like payroll, inventory, or seasonal expenses. Lines of credit offer flexibility that allows businesses to withdraw funds when needed up to a predetermined limit.
Capital Call Lines of Credit
Capital call lines of credit, or subscription lines, are specialized financing tools for private equity firms. The firm uses capital from its limited partners to secure these loans, which provide liquid funds for the business to use before it collects capital contributions.
Equipment Loans
Equipment loans provide funding that enables businesses to purchase the following to use in business activities:
- Machinery;
- Vehicles;
- Office items like computers, printers, copiers, and phone systems; and
- Heating, ventilation, and air conditioning systems.
The equipment itself often secures the loan.
Construction Loans
Construction loans provide financing for real estate development. Developers and contractors often depend on these loans for residential, commercial, or mixed-use construction projects. You typically withdraw funds in stages as work progresses.
Acquisition Financing
Acquisition financing often involves a combination of debt and equity and supports businesses merging with or acquiring other businesses. Companies planning mergers, acquisitions, or asset purchases rely on acquisition financing to fund these transactions.
What Does a Commercial Finance Lawyer Do?
A commercial finance lawyer helps businesses structure, negotiate, and document the financial transactions that enable them to achieve their goals. We work with lenders and borrowers to facilitate loans, lines of credit, and financing for mergers and acquisitions. We also protect clients from pitfalls and ensure compliance with applicable laws and regulations.
Negotiating Agreements
We use our extensive legal knowledge and experience to ensure contracts contain no surprises and that our clients truly understand the entire agreement. The lawyers of BMK understand the nuances of commercial finance, including particularly complex subscription lines of credit.
Due Diligence and Risk Assessment
Before a financial transaction, we do our due diligence to assess the risks involved. Some potential risks that arise in different contexts may include challenges related to:
- Repayment schedules,
- Interest rate fluctuations,
- Depreciation of the value of the collateral,
- Delays in project timelines,
- Changing project costs,
- Disagreements over asset valuation, and
- Restrictive or ambiguous loan terms.
We can identify these risks and help you understand what they mean for you.
We also consider compliance with relevant laws and whether an agreement involves hidden liabilities that could affect the business later. Then, we discuss our conclusions with our clients and help them decide how to proceed.
Secured and Unsecured Transactions
We usually deal with secured transactions, where a business pledges collateral to secure a loan. For example, equipment may be the collateral the business uses for an equipment loan. Yet, we also assist with unsecured transactions, which do not involve collateral.
Regulatory Compliance
We ensure that all financial transactions comply with federal and state laws. We understand the ins and outs of banking laws, lending practices, and securities regulations that affect business financing.
Debt Restructuring and Dispute Resolution
When a business struggles to repay debts, we can assist in restructuring debts and negotiating with creditors to avoid bankruptcy. We work to find solutions that benefit both the company and its creditors.
Additionally, when disputes arise, like allegations a party breached the contract, we represent clients and work to resolve the issue. We may focus on negotiations, litigation, or both.
Mergers and Acquisitions
Commercial finance attorneys are essential in structuring the financial aspects of mergers and acquisitions. We ensure your financing aligns with merger or acquisition terms, protecting the interests of buyers and sellers alike.
Business Financing Strategy
We also work closely with business owners and financial professionals to determine how best to finance growth, acquisitions, or capital expenditures. We offer advice about options like venture capital, private equity, and public financing.
Why Choose Our Commercial Finance Attorneys?
BMK’s commercial finance attorneys offer unmatched experience, skill, and dedication. Our team understands commercial financial transactions. By combining technical knowledge with real-world insight, we guide lenders, borrowers, and private equity firms through highly complex transactions.
BMK is committed to helping businesses thrive through innovative commercial finance solutions. Whether you need assistance with loan structuring, compliance, or dispute resolution, our attorneys are here to help. Contact us today to schedule a consultation.