Business loan & financing agreements
Most business financing comes with a personal guarantee and security over your assets — so a loan to the company can reach your home and savings if things go wrong. We review the loan, guarantee, and security documents, explain in plain terms what you’re personally taking on, and flag what’s worth pushing back on — especially on the deals where it matters most: a private or alternative lender, financing to buy a business, or a guarantee with no limit. At a fixed fee, scoped before any work begins.
We review the financing documents Ontario businesses are asked to sign — loan and credit agreements, promissory notes, personal and corporate guarantees, and the security that backs them. We focus on what you’re personally exposed to and what’s genuinely negotiable, so you borrow with the full picture in front of you. It matters most when the stakes are real: a sizeable facility, an aggressive or unfamiliar lender, or financing tied to buying a business. Because we read these documents the way the other side does, you understand not just what the words say, but how a lender can use them.
Financing documents are written by the lender’s lawyers to protect the lender, and the part that should concern you most is rarely the interest rate. It’s the personal guarantee and the security — the terms that put your own assets, not just the company’s, behind the loan. Once you sign and draw down, you’re bound by all of it. The terms that catch borrowers off guard are usually these:
Lenders routinely require the owner to guarantee the loan personally, often jointly and severally — so a default reaches past the company to your home and personal assets.
A general security agreement registered under Ontario’s Personal Property Security Act can place a charge over essentially everything the business owns, which the lender can enforce if you default.
A demand loan or operating line can be called by the lender at any time, often on short notice, even when you haven’t missed a payment — very different from a committed term you can plan around.
Financial ratios you must maintain, reporting obligations, and restrictions on further borrowing, dividends, asset sales, or a change of control can limit how you run the business and trip a default even while you’re paying on time.
Broadly drafted defaults — including cross-defaults and “material adverse change” clauses — can let the lender call the entire loan and enforce its security on a single stumble.
Fees, default interest, and prepayment penalties all affect the true cost of borrowing, and the headline rate is rarely the full picture.
Not every routine advance needs a lawyer. A review earns its keep when the exposure is real or the terms are unfamiliar — most often when you’re:
By the time the formal loan package arrives, the key terms — amount, rate, security, guarantees, and covenants — have usually been settled in the term sheet or commitment letter. That is the moment with the most room to negotiate, so the earlier you involve us, the more we can do.
Already signed a commitment letter, or been handed the final documents? We can still review them, explain what you’re committing to, and flag what’s worth raising before funds are advanced.
Send the term sheet, commitment letter, or full loan package, and tell us the amount, the lender, and your timeline.
A plain-language engagement letter setting out exactly what we’ll do, the fixed fee, and by when — agreed before any work begins.
We work through the loan, guarantee, and security documents and assess the obligations, the risks, and anything unusual or one-sided — measured against how you actually operate.
A plain-language summary of the key terms and risks, and specific recommendations on what to clarify or push back on, before you sign and draw down.
You’re not required to, but the loan documents are the lender’s paper, drafted to protect the lender, and they usually come with a personal guarantee and security over your assets. A review tells you what you’re really committing to — and what’s negotiable — before the money moves and the terms are locked in.
A personal guarantee makes you personally responsible for the company’s debt, so the lender can pursue your own assets if the business can’t pay. With most small-business lenders it’s hard to avoid entirely, but it’s often negotiable — a dollar cap, a limit to certain assets, or a release once the business hits agreed milestones may be on the table. We advise on the risk and help you push for better terms.
Often more than a bank loan. Private lenders, fintech facilities, merchant cash advances, and factoring arrangements tend to carry more aggressive terms — higher effective costs, broad security, and quick default triggers — and they’re the agreements where borrowers most often get caught out. A review tells you what you’re really signing up for before you commit.
Security gives the lender a legal claim over specific assets — often everything the business owns, under a general security agreement registered against you under Ontario’s Personal Property Security Act. If you default, the lender can enforce against those assets ahead of unsecured creditors. We explain exactly what you’re pledging and where it can be narrowed.
A committed term loan runs for a set period on agreed terms you can plan around. A demand loan or operating line can be called by the lender at any time, often on short notice, even if you haven’t missed a payment. Knowing which you have — and what can trigger a call — matters a great deal to how you run the business.
Yes — and that’s the best time. The key terms are usually set at the term sheet or commitment letter stage, so reviewing it then gives you the most room to negotiate before everything is formalized.
Yes. It’s better to involve us before you commit, but if you’ve already signed a commitment letter or been handed the final documents, we can still explain your obligations, flag the risks, and identify what’s worth raising before funds are advanced.
Before you put your own assets behind the loan, let’s make sure you know exactly what you’re committing to. The first conversation is on us.
Book a callThe information above is general in nature and is not legal advice. Every situation and transaction is different, and advice tailored to your specific circumstances is required to address your particular needs. If you have questions, contact Align Counsel at info@aligncounsel.ca.