In the current COVID-19 world of low interest rates, we are noticing more businesses shopping around for the most attractive finance options. Once you have decided on your lender however, what happens next? There is a lot to consider in the time between deciding on your lender, to accessing your loan, especially if you have existing finance in place. Here are a few things to consider in anticipation of your refinance.
Engaging a lawyer
1. As lenders require their instructions and accompanying loan documentation to be provided to a lawyer, you will need to engage a solicitor to assist with your refinance. Our commercial team are experienced in the world of banking and finance and would be happy to help. If you require our assistance, please get in touch.
2. Your solicitor has obligations under the Anti-Money Laundering and Counter-Financing of Terrorism Act 2009, and will require certain information to verify your identity before they can proceed with the refinance. We will notify you of exactly what identification documentation is required to comply with these obligations.
3. To the extent that a conflict of interest arises due to the number (or nature) of the parties involved in the refinance, some parties may be required to take independent legal advice. We will be able to advise you if we consider a party should obtain independent advice.
Initial Review
4. Once your solicitor has received your new lender's instructions and loan documentation, these will need to be reviewed to ascertain what the lender requires to complete the refinance, confirm the material terms of the loan (including the loan amount, interest rates and repayment requirements) and understand the security structure that the lender requires to support the lending. The timing of this review will vary depending on the complexity of the loan arrangements.
5. We will provide you with copies of the loan documentation received by the lender for your own review, and confirmation that the documentation reflects the loan arrangements as you understand them. If anything is recorded incorrectly, we will arrange for the lender to prepare new loan documentation.
Guarantees
6. Personal guarantees may form part of the security structure required by the lender to support the lending. If guarantees are involved in the loan arrangements, guarantors will need to be advised on the nature and material terms of the guarantee they are providing, and its implications. To the extent that guarantors do not require independent legal advice, we can provide guarantee advice.
Existing Financiers
7. Your refinance will involve repaying all outstanding amounts owing to existing lenders and financiers, in exchange for a release of any existing securities they hold or have registered on the Personal Property Securities Register. Accordingly, it is time to consider who your current lenders or financiers are and begin the process of obtaining the release of any existing securities held by such parties.
8. We can discuss with you the best way to approach existing lenders to obtain repayment statements outlining the exact amounts you owe to them, and procure the release of any securities they hold against you in relation to those outstanding amounts.
Insurance Requirements
9. If the lender is taking security over your business or assets, they will likely require that they be noted as an interest party on your insurance policy. You will need to contact your insurance broker to request updated insurance certificates recording your new lender as an interested party on your policy.
Execution and Drawdown
10. Now we have worked through the above, it is time to meet and sign the loan documentation. The executed loan documentation will then be returned to the lender to complete drawdown.
11. It can take up to two (2) business days following return of the documents for funds to be made available by the lender. If we are completing the refinance on your behalf, we will receive the funds into our trust account and facilitate the required repayments to your existing lenders. The balance of the loan can then be made available to you.
Transaction Complete!
If you are thinking about refinancing or you have any questions surrounding the process set out above, please do not hesitate to get in touch with our commercial team, who are happy to assist.
