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JPEsq
JPEsq, Attorney
Category: Business Law
Satisfied Customers: 5106
Experience:  Experience as both in-house and outside counsel in general business and transactional law
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In order to obtain increased funding from our bank they are

Resolved Question:

In order to obtain increased funding from our bank they are to ask for a standard security over our factory premises. (We currently have a Bond and Floating Charge). Can you explain, in broad terms, what this means in practice, please?

Mamy thanks
Submitted: 5 years ago.
Category: Business Law
Expert:  JPEsq replied 5 years ago.

This means that the bank will use the actual premises as collateral for the loan. The bond is essentially an insurance policy to cover the original loan in case you do not pay. But the amount of the bond apparently does not cover the additional amount to be lent, as such, they want more collateral.

 

In essence, you are taking out a mortgage on the factory.

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