Why Choose Us?
We represent local and regional banks on commercial loans secured by real property, inventory, receivables, and other forms of personal property, including complex transactions involving:
- Secured and unsecured credit transactions
- Asset-based financing transactions
- Acquisition loans
- Construction loans
- Refinancing and modifications
- Letters of credit
- Modifications and restructurings
Majumdar Law can assist clients with all aspects of structuring, negotiating, documenting, closing, administering, restructuring, modifications, and related transactions.
FAQs
What’s the difference between a secured and an unsecured commercial loan?
A secured loan gives the lender a legal interest in specific collateral — real estate, equipment, inventory, receivables, or other personal property — that it can pursue if the borrower defaults. An unsecured loan relies solely on the borrower’s creditworthiness and general promise to repay, with no specific asset backing it, which typically means more underwriting scrutiny and a higher interest rate. For secured transactions, properly perfecting the lender’s interest matters as much as documenting it: real property collateral is secured by a recorded mortgage, while a security interest in inventory, equipment, or receivables is perfected by filing a UCC-1 financing statement. Getting the priority and perfection right is what determines whether a lender’s collateral position actually holds up against other creditors.
What is asset-based financing, and how is it different from a traditional term loan?
A traditional term loan is typically underwritten around a borrower’s overall cash flow and creditworthiness, with a fixed repayment schedule. Asset-based financing instead ties the amount a borrower can draw to the current value of specific collateral — most often accounts receivable and inventory — with borrowing capacity that can fluctuate as those asset values change, often structured as a revolving line rather than a fixed-amount loan. It’s a common structure for businesses with seasonal cash flow or working capital needs that a standard term loan doesn’t fit well, but it requires more detailed collateral documentation, ongoing monitoring or reporting covenants, and clear terms for how borrowing base calculations work.
What’s the difference between a loan modification and a full restructuring?
A modification typically adjusts specific terms of an existing loan — the interest rate, maturity date, payment schedule, or a covenant — while leaving the rest of the original loan documents intact. A restructuring is more comprehensive: it usually happens when a borrower is in or approaching default, and it can involve renegotiating the entire debt structure, adjusting or releasing collateral, adding new guarantors, or converting part of the debt into different terms altogether. We handle both, from routine amendments and refinancings to more complex workouts where the lender’s collateral position and remedies need to be carefully preserved through the process.
What’s the purpose of a letter of credit in a commercial transaction?
A letter of credit is a bank’s written commitment to pay a specified amount on behalf of its customer if certain conditions are met — it’s a payment guarantee, not a loan of funds upfront. They’re commonly used to support a borrower’s performance obligations in a contract, back a construction project, or facilitate a transaction where the other party wants assurance of payment without waiting on the buyer’s own creditworthiness. Structuring the terms and trigger conditions correctly is important, since a poorly drafted letter of credit can expose the issuing bank to a draw it didn’t intend to guarantee.