To grow your small business, you may seek to borrow for a variety of reasons: To buy another business, to build or to cover a short period of time when some capital may be necessary for the business to survive. The way that these loans are structured could have a strong effect on your business’s future.
Washington Loan Transaction Lawyer
A skilled attorney can look at your lending documents and review with you what the terms could mean for you and your business. Joyce Schwensen is a dedicated, detail-oriented Washington business lawyer who will carefully and thoroughly examine your potential loan transaction. She can also negotiate for terms more in line with your interests.
Call Law Offices of Joyce S. Schwensen today to schedule a consultation. Joyce Schwensen represents small business owners throughout King County, including Seattle, Bellevue, Kent and Renton.
Information on Loan Transactions and the Law
There are many types of loans that a business may seek. The type of loan necessary will largely depend on the purpose for which you are seeking the loan.
Some common business loans are:
- Acquisition Loans: This type of loan is borrowed in order to purchase a specific asset. These are only available when the borrower is able to lay out a particular purpose for the loan, and is usually only available for a short period of time.
- Bridge Loans: This is financing that can be used a “bridge” between the time of need and when the business secures permanent financing. It provides immediate cash to meet current obligations.
- Construction Loans: A construction loan is much like it sounds: A loan obtained for the purpose of construction of a new building, building a new addition or renovating an older building.
- End Loans: These are long-term loans used to pay off shorter-term loans, including construction loans and bridge loans. They may be used to combine two or more loans to allow the borrower to deal with just one lender and just one payment.
- Government-Backed Loans: The U.S. Small Business Administration has a variety of loan programs, including the 7(a) program. There are advantages and disadvantages of government-backed loans.
- Letters of Credit: Letters of credit are more typically used in international transactions, since the laws in different countries as they pertain to lending may be different. A letter of credit is a letter from a bank or lender guaranteeing that the terms of a loan will be fulfilled.
Your lawyer will look at the terms of the loan, discuss them with you and help make sure the terms meet the goals of your business. It is important that you understand the terms of your loan before you commit to borrow the funds.
Some terms commonly at issue include:
- Amortization: Amortization means the speed at which you will be required to repay of the loan. The length of the repayment period, or “term”, will have a significant effect on the amount of the regular payments, as well as on the amount of interest you will pay, and therefore on the bottom line on your company.
- Interest Rate: It is obvious that a higher interest rate costs a borrow more money. But there are different interest rate schemes to consider, such as fixed rates, floating rates, and adjustable rates. Each has risks and benefits, and choosing the right interest rate program for your business is an important decision.
- Balloon Payments: Balloon payments occur when loan maturity date is scheduled sooner than when the loan would be paid off through the regular payment schedule. The balloon payment is a large payment due on a certain date to pay off the entire remaining balance of the loan. These are common in commercial real estate transactions.
- Collateral: The lender may seek some form of collateral, either personal property or real estate.
Finding the Best Seattle Attorney to Review Loan Transactions for Small Businesses
When you sign a loan, you are making a commitment. It is important to fully understanding the nature of that commitment. Joyce Schwensen is a Seattle lawyer who assists small business owners in loan transactions. Call today at (206) 367-1065 to set up a consultation.