Harper James is a modern, full-service UK commercial law firm advising ambitious businesses, including start-ups, scale-ups and established companies, on the laws of England and Wales. Reviewing commercial finance documents requires more than checking the interest rate. The borrower needs to understand the funding structure, the lender’s controls and the consequences of missed obligations before signing.
Start with the term sheet, facility agreement and any security documents as a single package. Check the facility amount, purpose, interest margin, arrangement fees, repayment schedule, default interest and conditions precedent. Then map the information undertakings, financial covenants and events of default against the company’s actual reporting systems and forecast cash flow. A covenant that appears manageable in the base case may become restrictive after an acquisition, dividend payment or change in ownership.
Security deserves separate attention. Identify whether the lender receives a debenture, fixed charges, floating charges, guarantees or security over shares and intellectual property. Review priority arrangements and any intercreditor agreement where more than one lender is involved. A practical review should also confirm who has authority to give guarantees, whether board or shareholder approvals are required, and whether Companies House filings must be made. For further reading, use this commercial finance document review resource.
UK sterling facilities commonly reference SONIA rather than LIBOR, with the agreement setting out the interest period, observation method, fallback provisions and adjustment language. Reviews also give close attention to financial reporting, sanctions and anti-money-laundering requirements, permitted acquisitions, disposals, additional borrowing and restrictions on distributions. Sustainability-linked finance adds another layer: the documents should define performance targets, reporting evidence and the financial consequence of missing a target, rather than relying on broad environmental wording.
A useful workflow is to prepare a document map, list every borrower obligation by frequency and owner, test the covenants against financial forecasts, and produce a negotiation schedule ranked by business impact. Priority points usually include default triggers, personal or group guarantees, cash sweep provisions, waiver rights, break costs, lender discretion and restrictions on future fundraising. The final signing checklist should record conditions precedent, legal opinions, security filings, authorised signatories and post-completion reporting dates.