Introduction to Commercial Law
Commercial Law, in a nutshell, encompasses the laws that govern financing and lending to businesses. Loans to businesses can be made by banks, private investors, friends and family, and can span the course of many years.
The lifecycle of Commercial Law can be broken down into 3 categories. Stage 1 covers includes how the loan is negotiated, structured, financed, and drafted. I like to refer to this stage as the inception stage, because all parties are usually excited to “get the deal done” and to move forward with the transaction.
The 2nd Stage in Commercial Law involves changes to loans, such as adding or releasing guarantors, adding, substituting, or removing collateral from the loan and otherwise modifying the terms of the loan such as the interest rate, loan term, default provisions and other terms.
The 3rd Stage of Commercial Law occurs when a borrower cannot meet the terms of the loan and the lender starts taking steps to collect on the loan, and can involve lawsuits, foreclosure, and other collection measures. This is the “breakdown” stage, and is the most unpleasant stage in the process.
Each stage has many complexities and through these posts, I hope to explain the basic framework and demonstrate how an experienced attorney can navigate this difficult and complex area of the law.