Asset-based loans are the most common form of finance among closely held companies. Often lenders are unwilling to loan on the basis of a company’s cash flow – or loan on terms the company finds acceptable – leaving collateral based loans – secured by the company’s equipment, inventory, receivables or other assets – as the only form of capital available to the company. Each type of collateral loan has a different structure and its own nuances that may help the company sustain operations and grow, or prove to be an operational hindrance. This program will provide you with a practical guide to structuring, reviewing and drafting for asset-based loans.
· Asset based v. cash flow borrowing – how it impacts reps, warranties and covenants in loan documents
· Overlay of UCC Article 9 law and practice on asset-based finance
· Types of loans – revolving loans based on inventory and receivables, terms loans based on equipment, and chattel paper financing
· Structures – bilateral v. syndicated loans, letter of credit facilities, second liens, inter-creditor agreements
· Lender fees and other compensation
Steven O. Weise, Proskauer Rose, LLP – Los Angeles