common will be mortgages, legal charges, assignment of rental income etc. The key point here is to ensure that all security is registered in time with the relevant author- ities. If it is English law, think Companies House and the Land Registry but if there are other justifications involved, speak to your local lawyers. Then there’s financial covenants . These are the lender’s way of keeping Borrowers on a short leash. Ratios such as EBITDA, LTV, debt-to-equity, interest coverage, or liquidity thresholds must be maintained and if there is a breach - Event of default. From a legal perspective, all these clauses need to be enforceable and watertight. Much of it will be boiler plate. Lenders also require ongoing reporting— quarterly financials, compliance certificates—to monitor the financial health of a Borrower - any lender will want to know what a Borrower is up to and how it is getting on. Finally, the facility agreement. The loan agreement is your magnum opus: It outlines terms, representations, covenants, events of default, and remedies. Add in security documents, guaranties (personal or corporate), and intercreditor agreements (if multiple lenders are involved). Lenders sometimes insist on legal opinions confirming enforceability. If there are any conditions subsequent, put these in the diary and make sure you follow up on them.
In this short article, I’ll be running through some of the basics that the banking team do in QAS and predominately from a lender’s perspective – I’ve worked in house before so hopefully some of what I have to say below is useful If you have any questions, please get in touch.
The Basics of Banking: What Lenders Crave
In the world of conventional banking, lenders are like vigilant guardians of cap- ital. They won’t be handing out funds for no reasons – they will have requirements galore to mitigate risks, ensure repayment, and comply with all relevant laws. From a lawyer’s standpoint, understanding these is crucial because, if you’re like me, Rima or Oz, you’ll be the one drafting, negotiating, and enforcing the documents that make it all tick. First off, due diligence is king. Lenders demand a thorough vetting of the bor- rower. This isn’t just a casual background check - it’s a full-on legal autopsy. Banks and other lenders will run through financial statements, credit histories, and even the borrower’s business model. For corporate loans, expect deep dives into corporate gov- ernance: Are there any pending litigations? Hidden liabilities? As legal advisors for a bank of lender, we should; not review these documents, but we require representations and warranties in the loan agreement that everything’s above board. Breach these, and defaults clauses kick in, potentially leading to default interest, acceleration of the loan or, depending on the security structure, the appointment of a Receiver or Administrator. Next up: collateral and security interests. Lenders aren’t philanthropists; they will want something to fall back on if things don’t go well. For REF loans, the most
Islamic Finance: Sharia-Compliant Lending Without the Interest
Looking at Islamic Finance - a rapidly growing sector worth over $3 trillion globally as of 2025. From a financier’s perspective, it’s not about interest but profit-sharing and asset-backed deals, all aligned with Sharia principles. No “riba” (interest), no “gharar” (excessive uncertainty), no “maisir” (gambling).
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THE LEGAL CORNER MAGAZINE | ISSUE 13 DECEMBER '25 HB
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