Business Financing

Let’s assume that for some reason you feel compelled to offer and assist someone who needs financing for their business.

What security do you want?

Well, you should get everything you can!

In the case of a business, this truly does mean everything. Because, the parts have little to no value!

So, my first advice is: don’t get involved.

My second advice: take a collateral security on a non-business asset, like a house or a car. You can always sell a house or a car.

Finally, if you must offer the loan, here is what might be available:

1)     Chattel mortgage, upon specific chattels for major purchases, big ticket items, tools of the trade,

2)     Assignment of Leases upon specific chattels for major purchases, big ticket items, tools of the trade,

3)     accounts receivable,

4)     assignment of book debts,

5)     General Security Agreement,

6)     Assignment of Leases upon business premises,

7)     Assignment of Options to Lease upon business premises,

8)     Assignment of Agreements to Purchase upon business premises,

9)     Assignment of Options to Purchase upon business premises,

10)   A pledge of the shares of the operating company,

11)   A pledge of the shares of the holding company,

12)   An assignment of the suppliers’ accounts,

13)   A pledge of any intellectual property,

14)   An agreement to be named as an additional insured on the insurance policy

15)   An agreement by the insurer to waive its rights of subrogation,

16)   An agreement to the assignment of the telephone number,

17)   An agreement to the assignment of the website,

18)   An Authorization to examine the books,

19)   An Authorization to examine the bank accounts,

20)   An Authorization to examine the HST returns,

21)   An Authorization to examine the Income Tax returns,

22)   An Authorization to examine the Workplace Safety assessments and payments,

23)   A personal guarantee and indemnification of the owner, proprietor,

24)   A personal guarantee and indemnification of the spouse of the owner proprietor,

25)   A copy of all suppliers’ contracts, including books of accounts, inventories and entitlements.

Of course, I’m still telling you that you should have second thoughts about this. But, you should have the above security for starters!

Brian Madigan LL.B., Broker
www.OntarioRealEstateSource.com

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