Why You Need a Legal Review Before Signing Any Financing Contract
Bank financing contracts are usually drafted by the bank in its own favor, and include complex technical clauses on guarantees, default conditions, and the bank's right to accelerate full repayment over a minor breach. We review credit facility and bank loan agreements before signing, with particular focus on these terms that could affect your business's continuity if not properly understood from the start.
Structuring Financing for Major Industrial Projects
We also help major industrial operators structure project financing in compliance with SAMA regulations and financing banks' requirements, especially for energy and infrastructure projects requiring multi-party financing from more than one bank or financier. Coordinating between multiple financiers requires precise drafting that establishes each party's priority upon enforcement over the guarantees.
Financing Guarantees and Their Effect on Your Business's Assets
Banks often request additional guarantees for financing, whether a mortgage on real estate — which we cover under our real estate mortgage services — a personal guarantee from partners, or a lien on the business's own equipment. We explain to clients the difference between these guarantee types and how each affects their freedom to dispose of assets later.
Islamic Finance as an Alternative to Conventional Financing
Many of our clients prefer Sharia-compliant financing structures, which we cover in detail under our Islamic finance and Takaful services, where the dispute-resolution mechanism and guarantee structuring differ from conventional interest-based financing.
What Happens Upon Default?
If your business faces difficulty repaying a financing obligation, it's essential to act early before the bank begins enforcement proceedings. We help clients assess rescheduling or negotiation options with the bank, and if that fails, we outline available protection paths under our insolvency and restructuring services.
Customer Disputes With Banks
Our services aren't limited to contract review; we also represent clients in existing disputes with banks, such as an unjustified refusal of a credit facility, miscalculated fees or interest not agreed upon, or disputes over liquidating guarantees without following correct procedures.
Reviewing Loan Guarantee Agreements Between Partners
When a bank requests a personal guarantee from partners or shareholders in exchange for company financing, the scope of that guarantee must be reviewed precisely: does it cover the full financing amount or just a portion? Does it end when the partner leaves the company, or continue afterward? These details can leave a partner personally financially liable for years after leaving the company if not carefully drafted.
Crowdfunding and Startup Financing
Alongside traditional bank financing, some startups turn to crowdfunding or venture capital financing, requiring an entirely different kind of review focused on shareholder agreements and voting rights rather than traditional asset guarantees. We help startups understand the difference between these two paths and choose the right one for their growth stage.
Anti-Money-Laundering Compliance in the Financial Sector
Banks and finance companies are obligated to apply strict customer identity verification procedures and monitor suspicious transactions, and any major commercial dealing may be subject to these procedures. We help clients understand these compliance requirements when conducting large financial transactions, to avoid unexpected delays or account freezes.
Bank Letters of Guarantee in Commercial Contracts
Government bodies and major companies often require a bank letter of guarantee as a condition for contracting — a financial obligation separate from direct financing that deserves special review. We help clients understand the terms for activating this guarantee, and when the beneficiary is entitled to claim its value without needing to prove actual damage — a point that often surprises business owners.
Escrow Accounts in Major Transactions
In major commercial deals, an escrow account is used to protect both parties, where funds are deposited with a neutral third party and only released once specific conditions are met. We help draft escrow agreements that protect all parties' interests and clearly define the fund-release mechanism.
How Our Firm Helps
We combine precise legal understanding of SAMA regulations with practical negotiating experience with banks, ensuring our client's interests are protected at every stage of the financing relationship. To reach us or book a free legal consultation, our team is available on WhatsApp around the clock.
Working Capital Facilities for Industrial Businesses
Industrial businesses managing a long operating cycle — purchasing raw materials and manufacturing before selling — often need flexible working capital facilities that account for this cycle. We help these businesses negotiate facility terms suited to their actual business nature, rather than accepting a generic financing model that doesn't account for the industrial sector's specifics.
Renegotiating Existing Financing Terms
Market conditions change, and sometimes a business needs to renegotiate the terms of existing financing — whether to ease required guarantees or extend the repayment period. We help clients assess when requesting renegotiation makes sense, and how to present this request to the bank in a way that improves the chances of approval.
Foreign Trade Financing Instruments: Letters of Credit
Businesses importing raw materials or equipment from abroad often rely on letters of credit as a secure payment method, where the bank guarantees the exporter payment against specific shipping documents. We review letter of credit terms precisely, because even a minor discrepancy between the actual documents and the credit's terms can give the bank grounds to refuse payment entirely — a point that has cost many importers unexpected losses.
Large Credit Exposure Reporting Obligations
When a business's facilities exceed a certain threshold, banks become subject to special regulatory disclosure obligations toward SAMA regarding these large credit exposures. We help major business clients understand how these regulatory requirements can affect the speed of approval for additional facilities or renewing existing ones.
Periodically Reviewing an Existing Banking Relationship
We advise clients not to settle for a single legal review at the start of a bank relationship, but to schedule periodic reviews, especially when renewing facilities or when business activity changes significantly. These periodic reviews sometimes reveal opportunities to negotiate better terms that weren't available at the time of the original signing.
Frequently Asked Questions
Do you review financing contracts before signing?
Yes, reviewing financing contracts before signature is one of our core services to protect our client's interests.
What if a bank unjustifiably refuses a credit facility?
We review the grounds for refusal and help you assess available appeal or negotiation options.
Do you help structure financing from more than one bank for the same project?
Yes, we have experience structuring multi-party joint financing agreements for major industrial projects.
What's the legal difference between conventional and Islamic financing?
Islamic finance is built on structures like Murabaha and Ijara instead of interest, and has a different dispute-resolution mechanism we cover under our Islamic finance services.