Michigan

Commercial Lending 101 for Michigan Business Owners

At some point, virtually every business will need to borrow money to finance its operations or expansions. Financing can be used to fund working capital or other financial needs such as funding inventory, equipment, buildings, plants, and general business growth. Businesses obtain loans from a number of different sources that range from the traditional (banks) to the more exotic (finance and factoring companies).

There are many different kinds of loans; one size definitely does not fit all. Therefore, it is imperative that a business seeking a commercial loan gets the kind of loan that it needs, and that works well for that particular business. Loan options include lines of credit, term loans, real estate loans, equipment leasing, factoring, and industrial revenue bond financing.

Any Michigan business that is getting a commercial loan should seek the advice of a competent Michigan business lawyer (with real estate financing experience) to help them in the process. A commercial borrower's lawyer has four main responsibilities to his or her client. First, a borrower's lawyer will help ensure the borrower understands the loan itself and is actually getting the loan the borrower thought it was getting. Second, the borrower's lawyer will review the loan documentation and try to get the appropriate changes made to protect the borrower in the areas that are important to the borrower. Third, the borrower's lawyer will review the loan's terms and conditions so the borrower fully understands its rights and responsibilities under the loan. Fourth, the borrower's lawyer will attend the loan closing and help facilitate a smooth cap to the loan transaction.

It is best for a business to involve its attorney as early in the loan process as possible. Ideally, a business will be in communication with its lawyer before the loan commitment letter is signed. This will help make it possible for its lawyer to fully assist and protect the borrower in the loan negotiation process.

Full post as published by Michigan Business Lawyer Blog on January 11, 2008 (boomark / email).