Finance Law of Australia

Security For Finance

The company is now planning to use different forms of debt to raise funds for future expansion of its business and to purchase equipment and pay salaries.

The lenders are raising issues of security for this use of debt.

The company wants to use debt as a fundraising vehicle for the company but the directors of the company are not sure about the security requirements of the lenders.

What are reasonable security requirements by the lenders for debt finance?

Are the costs and risks of providing security to lenders for debt raising worth the use of debt?

Advise the client as to how the security requirements of the lenders should be assessed. Are they reasonable security requirements? What would be reasonable security for finance?

What forms of security would you advise the client agree to in this case?

What are the risks of giving security for finance? List the advantages and disadvantages of using security for finance.

What concerns would the lender have about securing the money the lenders are lending to the company?

What would the lenders demand as security?

What risks does the lender of debt finance undertake in lending to the company?