Cheaper Loan Closings
Here's the bad news: each time your company closes on a bank loan, you'll typically have to pay the bank's lawyer and your own. Now for the silver lining: you can control those expenses. On a $1-million loan, the lawyers' combined costs could approach $20,000, says Dennis White, a partner at the Boston law firm of Sullivan & Worcester. But if you govern the process, costs could approach just $7,000. White suggests these control techniques:
· Track down the necessary paperwork yourself. "Business owners often don't realize that a lawyer's time is their money. So if you can pull together whatever insurance certificates or evidence of corporate good standing the bank requires for closing, you'll reduce your overall bill."
· Use your pencil rather than the telephone. Lawyers will circulate a draft loan document for your comments as well as the bank's. "If you make comments by marking up the document rather than phoning your attorney, you'll find that queries can be handled more efficiently." Another tip: call bankers directly with significant objections to terms, since, as White puts it, "they won't bill you for the conversation, the way your lawyer will."
· Move quickly. Loan closings should take no more than two or three weeks in White's assessment. When they drag on longer -- perhaps because your company has stalled during the documentation or loan comment stage -- your lawyer may well forget the technicalities of the deal. "When lawyers have to keep refreshing themselves on the loan process, they'll charge you for the extra time involved," warns White.
· Take control. Establish a legal budget at the outset, and manage the entire process. "Turning everything over to a lawyer with instructions to 'just close the loan,' with no supervision, is like telling an auto mechanic to find something wrong with your car," says White.* * *