Inventory Financing Agreement for the United Kingdom

Inventory Financing Agreement Template for England and Wales

An Inventory Financing Agreement under English and Welsh law is a specialized financing arrangement where a lender provides funding secured against a borrower's inventory. The agreement details the terms and conditions of the facility, including the borrowing base calculation, inventory eligibility criteria, reporting requirements, and security arrangements. It incorporates specific provisions required under English law regarding security interests, registration requirements, and enforcement mechanisms.

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What is a Inventory Financing Agreement?

The Inventory Financing Agreement is commonly used when businesses require working capital secured against their inventory. This agreement, governed by English and Welsh law, enables companies to leverage their inventory assets to obtain financing while maintaining operational flexibility. It includes detailed provisions for inventory valuation, monitoring, and reporting, along with specific security arrangements required under English law. The document is particularly relevant for businesses with significant inventory holdings seeking to optimize their working capital management.

What sections should be included in a Inventory Financing Agreement?

1. Parties: Identification of financing party and borrower

2. Background: Context of the financing arrangement and purpose of the agreement

3. Definitions: Key terms used throughout the agreement including financial terms, security arrangements, and inventory definitions

4. Facility: Terms of the financing facility including amount, purpose, and drawdown mechanics

5. Security: Details of inventory security arrangement, perfection requirements, and maintenance obligations

6. Conditions Precedent: Requirements that must be satisfied before the facility becomes available

7. Representations and Warranties: Borrower's statements about business condition, inventory ownership, and compliance with laws

8. Covenants: Ongoing obligations regarding inventory management, reporting, and operational requirements

9. Events of Default: Circumstances constituting default and consequences thereof

10. Boilerplate: Standard contractual provisions including notices, governing law, and jurisdiction

What sections are optional to include in a Inventory Financing Agreement?

1. Insurance: Specific insurance requirements for inventory and associated obligations

2. Third Party Rights: Provisions regarding rights of third parties under the Contracts (Rights of Third Parties) Act 1999

3. Assignment and Transfer: Provisions governing the transfer of rights and obligations under the agreement

4. Security Trustee Provisions: Required when multiple lenders are involved and a security trustee structure is needed

What schedules should be included in a Inventory Financing Agreement?

1. Form of Drawdown Notice: Template document for requesting funds under the facility

2. Eligible Inventory Criteria: Detailed specifications of inventory that qualifies for financing

3. Reporting Requirements: Templates and timing requirements for inventory and financial reporting

4. Security Documents: Forms of security documentation including debentures or specific security agreements

5. Pricing Schedule: Detailed breakdown of interest rates, fees, and pricing mechanics

6. Conditions Precedent Documents: List of required documents and conditions to be satisfied before first drawdown

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

England and Wales

Publisher

Genie AI

Document Type

Finance Agreement

Cost

Free to use
Relevant legal definitions
Clauses
Industries

Companies Act 2006: Key legislation governing corporate capacity, authority, and registration requirements for charges in financing agreements

Consumer Credit Act 1974: Regulates consumer credit arrangements, including licensing requirements and disclosure obligations if inventory financing involves consumer goods

Sale of Goods Act 1979: Governs title and transfer of goods, and establishes fundamental rights and obligations regarding inventory

Bills of Sale Acts 1878 and 1882: Historical legislation setting out requirements for security over personal property

Financial Services and Markets Act 2000: Establishes the regulatory framework for financial services in the UK

Enterprise Act 2002: Contains provisions regarding floating charges and enforcement of security in inventory financing

Insolvency Act 1986: Governs priority of creditors and security enforcement in insolvency situations

FCA Regulations: Regulatory requirements if the financing arrangement falls within regulated activities under Financial Conduct Authority supervision

Money Laundering Regulations 2017: Specifies due diligence requirements and reporting obligations for financial transactions

Common Law Contract Principles: Fundamental principles governing contract formation, consideration, and terms and conditions under English law

LIBOR Transition Regulations: Regulations governing reference rate provisions and alternative rate mechanisms in financial agreements

Data Protection Act 2018 and UK GDPR: Legislative framework for processing personal data and privacy requirements in business transactions

Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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