Alex is Sprintlaw’s co-founder and principal lawyer. Alex previously worked at a top-tier firm as a lawyer specialising in technology and media contracts, and founded a digital agency which he sold in 2015.
If you run a small business, “finance” can mean a lot of things at once - raising capital, managing cashflow, refinancing existing debt, buying assets, or bringing in a new shareholder.
And when money moves, risk usually moves with it.
A finance solicitor helps you document, negotiate and complete those finance arrangements properly, so you’re not relying on handshake deals, generic templates, or assumptions that can come back to bite you later.
In this guide, we’ll walk you through what a finance solicitor does, when it’s worth getting one involved, and what you can do to keep your deal moving without nasty surprises.
What Does A Finance Solicitor Do For A Small Business?
A finance solicitor (sometimes called a finance lawyer) supports businesses through transactions where money is being borrowed, invested, repaid, secured, or restructured.
In plain English: they help make sure the legal side of your funding is clear, enforceable, and commercially workable.
1. Drafting And Negotiating Finance Documents
Finance documents are the “rules of the deal”. They set out:
- who is paying who (and when)
- what happens if something changes (missed payments, delays, cashflow issues)
- what security is being given (if any)
- who controls what (for example, decision-making and consent rights)
- what happens if the business is sold (or raises more funding later)
Depending on the funding type, a finance solicitor might draft or negotiate:
- a Term Sheet to capture the key commercial points before the “full” documents are prepared
- a Share Subscription Agreement if an investor is buying new shares in your company
- a loan agreement (including repayment terms, interest, and default consequences)
- security documents (for example, debentures or guarantees, where appropriate)
The main job here isn’t to make the documents longer - it’s to make them clear, aligned with what you actually agreed, and set up so they’ll work in the real world.
2. Stress-Testing The Deal Before You Sign
A lot of finance problems don’t show up on day one. They show up later, when:
- your revenue is seasonal and a repayment date hits at the worst possible time
- you want to raise a second round of funding, but your first investor has broad veto rights
- you want to sell the business, but the lender can demand early repayment or block the sale
- a co-founder leaves, and no one is sure how their shares or obligations are handled
A finance solicitor helps you spot these issues early - before you’re locked in.
3. Making Sure The Paperwork Matches Your Company’s Legal Reality
Even if the deal is commercially fair, it still needs to “fit” your business structure and governance.
For example, if you’re a limited company, key funding steps may require:
- director approvals
- shareholder approvals
- updates to company records
- alignment with any existing investment documents
If you already have a Shareholders Agreement, your finance solicitor will usually check whether the new funding triggers consent rights, pre-emption rules, or restrictions on issuing shares.
4. Helping You Close The Deal (Without Last-Minute Panic)
Finance transactions often have “completion mechanics” - the practical steps that must happen in the right order, such as:
- signing documents in the correct capacity
- exchanging funds
- issuing shares
- filing forms (where required)
- releasing or replacing existing security
A finance solicitor helps manage that sequence so you don’t end up with a half-completed deal (which can be surprisingly easy to do when everyone is moving fast).
When Do You Actually Need A Finance Solicitor?
Not every business decision needs a specialist lawyer involved.
But if you’re dealing with funding that could materially affect your ownership, risk exposure, or ability to operate, getting a finance solicitor involved early can save you serious time and cost later.
Here are common scenarios where small businesses typically need finance solicitors.
You’re Borrowing Money (Especially If It’s Not A Simple Bank Loan)
If you’re taking a loan from:
- a director
- a shareholder
- a private lender
- a business contact (informal or “friendly” loan)
…you’ll want the arrangement documented clearly.
Even when the relationship is good, people’s memories of “what we agreed” can differ once repayment gets delayed or the business changes direction.
A properly structured Directors Loan Agreement (or other loan document) can clarify repayment terms, interest (if any), what happens if the business can’t pay on time, and whether the loan is secured.
You’re Raising Investment (And Giving Away Equity)
Equity funding is exciting - but it’s also one of the easiest ways to accidentally give away more than you intended.
If an investor is buying shares or converting future rights into shares, you should consider legal advice when:
- the investor wants special rights (vetoes, information rights, board involvement)
- there are multiple founders and the cap table is already complex
- you’re offering preference shares or different share classes
- you plan to raise again soon
Depending on the structure, you might use a Convertible Note or a SAFE Note (both common ways to raise money without setting a full valuation immediately). These are not “plug and play” documents - the details matter, and small drafting differences can have big financial outcomes.
You’re Buying Or Selling A Business (Or A Chunk Of It)
Buying a business, selling your business, or selling shares tends to involve a mix of legal and finance issues:
- how payment is structured (upfront vs instalments vs earn-out)
- what happens if performance targets aren’t met
- who is liable for historic debts or tax issues
- what warranties or indemnities apply
A finance solicitor can work alongside corporate or commercial solicitors to help document and negotiate the “money side” of the deal (for example, price mechanics, funding arrangements, and security, where relevant).
For example, if you’re selling shares rather than assets, a Share Sale Agreement is usually the key document setting out price, conditions, and protections for both sides.
You’re Refinancing Or Restructuring Existing Debt
Many small businesses reach a point where the original finance arrangement no longer fits - maybe you need:
- longer repayment terms
- lower monthly repayments
- to consolidate multiple debts
- to replace one lender with another
Refinancing often involves releasing old documents and putting new ones in place. That’s where drafting and execution details really matter - particularly if there’s security involved.
You’re “Papering Up” A Deal That Has Been Informal Until Now
This is more common than you might think.
Let’s say you’ve been operating with:
- an investor who put money in but never received formal shares
- a director loan that was never documented
- a repayment arrangement agreed over email
When you later try to raise funds, sell the business, or bring in a new partner, those informal arrangements can create delays and disputes.
A finance solicitor can help clean this up so your business has a clear and investable legal story.
Common Finance Documents Your Business Might Need
Every transaction is different, but there are a few finance documents that come up again and again for UK SMEs.
Here’s a practical overview of what they are and when they’re used.
Loan Agreements (Business Loans, Director Loans, Shareholder Loans)
A loan agreement typically covers:
- principal amount
- interest (if any)
- repayment dates
- early repayment rights
- events of default
- what happens on insolvency or business sale
Even if you’re borrowing from someone you trust, a written agreement helps protect both sides and keeps expectations realistic.
Security Documents (Where The Lender Needs Protection)
Sometimes a lender will want “security” - meaning they have rights over certain assets if the loan isn’t repaid.
Security can be complex, so it’s a good time to get advice on:
- what assets are covered
- whether security limits your ability to raise future funding
- what practical restrictions are created for the business day-to-day
Equity Investment Documents
If an investor is taking shares, documents often include:
- a term sheet (early stage summary)
- a share subscription agreement
- updates to the shareholders agreement
- company resolutions and filings
This is where it’s crucial that “commercial deal points” (like valuation and investor rights) actually match the legal drafting.
Novation And Assignment Documents (When Parties Change)
If your business is restructuring, selling a division, or moving contracts between entities, you might need to transfer rights and obligations properly.
In many situations, the cleanest approach is a Deed of Novation, which replaces one party to a contract with another - typically with everyone’s consent.
This can be a critical step in business sales, group restructures, and refinancing (where obligations need to move).
What To Look For When Choosing Finance Solicitors
Not all finance solicitors are the right fit for small businesses. Many are excellent - but focused on large-scale lending, property finance, or institutional deals that don’t match what an SME needs day-to-day.
Here are a few practical things to look for.
They Understand SME Reality (Speed, Budget, And Practical Risk)
In a small business, you often need:
- fast turnaround times
- plain English explanations
- a focus on the key risks (not pages of unnecessary complexity)
- pricing that makes sense for the size of the deal
A good finance solicitor will help you prioritise what actually matters - so you can move forward confidently without over-lawyering the transaction.
They Can Coordinate With Your Other Advisers
Finance work often overlaps with:
- corporate structure
- tax and accounting
- commercial contracts
- employment considerations (especially in business sales)
Your finance solicitor should be comfortable working alongside your accountant and any other legal advisers to keep the process smooth and avoid duplicated work.
They Flag “Future You” Problems
One of the most valuable parts of legal advice is the stuff you didn’t think to ask.
For example:
- Will this funding stop you from raising again quickly?
- Does this investor get a veto over hiring decisions or budgets?
- If one founder leaves, does the deal still work?
- If you sell the company, does the loan become immediately repayable?
These aren’t theoretical questions - they come up all the time as businesses grow.
How To Keep Your Funding Deal Moving (And Reduce Legal Costs)
Working with a finance solicitor doesn’t have to slow things down. In fact, it usually speeds things up - if you’re prepared.
Here are a few ways to keep momentum and avoid paying for unnecessary back-and-forth.
1. Write Down The Commercial Deal Points First
Before anyone drafts “the contract”, try to get clarity on the basics:
- how much money is being provided
- what you’re giving in return (interest, shares, repayment terms, control rights)
- timeframes (when money arrives, when repayment starts)
- what happens if things don’t go to plan
This doesn’t need to be perfect - but it gives your solicitor a clear starting point.
2. Gather Your Existing Documents Early
For companies, delays often happen because key documents are missing or outdated.
Have these ready (where relevant):
- your Articles of Association
- your cap table (who owns what)
- any existing shareholder agreements or investor side letters
- details of any existing loans or security
3. Be Honest About Risk Tolerance
Some business owners want maximum flexibility, others want maximum certainty.
Neither is “right” - but your solicitor needs to know your approach so the drafting matches your priorities (and doesn’t waste time negotiating points you don’t care about).
4. Don’t Sign “Just To Get It Done”
It’s normal to feel pressure when funds are on the line - especially if you need the money to hire, stock up, or keep the lights on.
But finance documents are designed to be enforceable. If you sign without understanding key clauses (like default provisions, personal guarantees, or consent rights), you can accidentally accept risk that’s far bigger than the funding amount.
If anything feels unclear, it’s worth pausing and getting advice tailored to your circumstances.
Key Takeaways
- A finance solicitor helps your business document, negotiate and complete funding deals properly, so the legal paperwork matches what you actually agreed.
- You’ll usually want a finance solicitor when you’re borrowing money (especially from directors/shareholders), raising equity investment, refinancing debt, or buying/selling a business.
- Common finance documents include term sheets, loan agreements, share subscription agreements, convertible notes/SAFE notes, and (in some cases) security documents.
- If you already have a Shareholders Agreement, your funding deal may need to fit within pre-emption rights, consent requirements, and governance rules.
- Finance transactions can create “future you” issues (like blocking a later funding round or a business sale), so it’s worth stress-testing terms before signing.
- You can keep legal costs down by clarifying commercial deal points early and gathering your existing company and funding documents upfront.
Disclaimer: This article is general information only and does not constitute legal, financial or tax advice. You should get advice tailored to your circumstances. Sprintlaw does not provide tax advice.
If you’d like help with a funding deal, refinancing, investment documents, or reviewing terms before you sign, you can reach us at 08081347754 or team@sprintlaw.co.uk for a free, no-obligations chat.
