What should you watch Out in a Letter of Offer/ Loan Agreement from Bank Before Accepting

Written by Milan Choo

The key points – when you receive a letter of offer/ Loan agreement, whether it is related to trade line/Forex line/loan/other financing products from the Bank, you should always take note of the 2 factors below:

1) Pricing & Flexibility

Pricing, in simple term, is the cost of financing charged by the Bank. You need to be aware of the market rate, and be sure that the pricing that you get is competitive for your Company. Obviously the pricing that you get will to a very large extent depend on your bargaining power, i.e. how important are you from the Bank’s point of view. Having said that you should always try to negotiate, you never know – you may get a better pricing after negotiation.

Flexibility – this would very much relate to the covenants. You need to peruse the covenants very careful and ensure that it does not impose too much of a restriction on you. You may encounter some clauses that compel you to obtain the consent from the Bank before you can proceed with certain matters – and hence you need to consider if you need this clause to be remove, or at the very least, modify it so that instead of requiring the Banker’s consent, you merely need to notify the Banker.

How can Beyond Solution Malaysia assist you?

- Speak to us if you require assistance with the preparation of business plan for the purpose of sourcing and raising debt and equity financing.