Introduction

Shields Legal’s banking and finance team routinely supports businesses in finding new lenders and securing better loan terms. This process starts with determining a company’s financial goals, evaluating the company’s current financing terms, and organizing essential information for potential lenders. In today’s declining interest rate environment, fixed rate loans are attractive refinancing candidates, while many borrowers have outgrown floating rate loans, have approaching maturities, or have expansion plans.

Organizing Financial Information

Prior to issuing a letter of intent (LOI), lenders typically request similar documentation:

• three years of financial statements (balance sheets, income statements, and cash flow statements), whether audited or unaudited;
• business tax returns (and sometimes personal returns, depending on the market);
• appraisals for equipment, inventory, and property; and
• business plans and financial projections.

Organizing this information can increase a potential borrower’s attractiveness to lenders and improve deal outcomes.

Building Connections

Relationships are crucial in moving from planning and strategizing to actual refinancing offers. Shields Legal has strong relationships with loan brokers, banks, and non-bank lenders who specialize in various industries and risk profiles. We frequently make introductions that lead to deals, even where that is the end of our involvement based on conflicts and other considerations. We know that the right connection can make all the difference.

Understanding Letters of Intent (LOIs)

LOIs preview a lender’s offer and are issued prior to a lender’s full underwriting, so they are subject to change, often depending on the diligence a lender completed prior to issuing the LOI. In addition to comparing the terms in the LOI to existing debt, LOIs offer borrowers an initial chance to negotiate the terms and structure of the debt. Lenders are typically eager to finalize deals at this stage, making it a strategic moment for negotiation.

Commitment Letters

Depending on the deal’s complexity and the parties involved, commitment letters may be essential or skipped. Many include “outs” for lenders, such as full credit approval or other conditions precedent at a lender’s discretion, which reduce their binding nature. On the other hand, binding commitment letters are essential for other types of transactions and protect borrowers against late-breaking adverse changes in terms. Commitment letters also contain essential details on payments, collateral, covenants, and other terms that are often missing from or vague in LOIs.

Choosing the Right Lending Partner

While the financing terms are front and center prior to closing, borrowers should understand that a refinancing partner is a key relationship for their business. Bank lenders now generally require a transition of treasury management services (payments, deposits, etc.) to their bank, which requires borrowers to move customer payments and similar functions to new accounts and platforms.

In larger deals especially, the financing terms may contemplate signing a commitment lender with a lead bank who will subsequently find participant lenders for a syndicated deal. Where applicable, this means borrowers should focus carefully on the provisions in the commitment letter, or they may ink a deal where the partner they chose is not the partner they receive.

Conclusion

In 2025, Shields Legal successfully guided numerous lender and borrower clients through refinancing transactions and anticipates this momentum will accelerate into 2026.  While the process can be complex, our team is here to simplify it by making key introductions and negotiating favorable terms in LOIs and commitment letters.  At Shields, we are committed to helping our clients achieve their financial goals.

This post is for informational purposes only and does not constitute legal advice or a legal opinon.