M&A Imagineer: Unofficial Commercial Paper for the Unquoted Private Sector
Traditional “Commercial Paper” (Bills of Exchange/Promissory Notes – “Debt Instruments”) is typically the preserve of larger corporates, especially if asset backed?? Such unsecured “cash flow” loans provide another mechanism for SMEs and MMEs to investigate as a potential alternative source of commercial funding – to supplement any existing arrangements or where these facilities have since been reduced by the Lender?
From experience, the reality is that even some micro businesses unofficially do lend to one another from time to time – perhaps the result of a family or other close commercial connection between each enterprise?? However, such arrangements and assistance may not be formalised?? In which case it may be worth exploring via your professional service advisory firms if this can be facilitated more legally – to protect all parties moving forwards?
Where any unofficial “loan” is given to another family member’s business, especially if relatively small, say a few hundred or a few thousand pounds/dollars by a larger family business sometimes it may be simply worth, after formally recording it, to effectively “gift” such monies instead of fighting about it afterwards – that may result in a permanent split in the family unit?
However, for larger sums expert legal assistance (especially) may be sensible to ensure that any arrangement is lawful: complying with any pertinent regulatory requirements – particularly if a legal charge is to be taken over all or some of the physical commercial assets?? Furthermore, you may need to ensure that any potential dispute is resolved quickly and with the least cost to each party – such as via professional third party arbitration, mediation or conciliation instead of litigating in the Court system?
“Neither a borrower nor a lender be; For loan oft loses both itself and friend, And borrowing dulls the edge of husbandry.”
Polonius, Hamlet, Act 1, Scene 3, William Shakespeare
领英推荐
There are times when we need a little financial help, being a smaller business is never easy, cash flow is always an issue; ideally you would not need to borrow but circumstances change, and when they do ensure that you have sought the help and assistance of your team of professional advisors to mitigate any future issues?? Moreover, to guarantee that an arrangement, if any, is genuinely fair for all concerned – next time it may be you who needs that helping hand?
?
Kip
The EBO Guy
…Acquiring businesses for employees