What Kind of Loan? 2026

Webinar Overview

In a broad sense, most commercial loans can be divided into two basic types: asset-based loans (ABL) and cash-flow loans (CFL).  

While these classifications are foundational, attorneys and parties to loan transactions must understand the legal implications of each structure. An ABL is made by a lender who underwrites the loan primarily by valuing the company’s assets, such as accounts receivable (A/R) and inventory. An ABL lender underwrites a loan based on the ability to liquidate collateral should it need to. A CFL lender, in contrast, while also secured against the borrower’s assets, underwrites the loan primarily based on the cash flow and general creditworthiness of the borrower. These differing underwriting approaches have important legal consequences for collateral requirements, covenant structures, and enforcement rights in loan documentation.

The distinction between these types of loans is only the beginning of understanding what kind of loan is at issue, a broader legal analysis of how loan structures affect borrower obligations, lender rights, and overall transaction risk. Attorneys and loan parties must evaluate how these structures are documented, negotiated, and enforced in practice.

Consideration should be given to a range of factors, including loan purpose, structure, and terms, as well as the legal implications associated with each. For example, working capital versus long-term investment loans raise different legal considerations relating to repayment terms and use-of-proceeds provisions, while expansion versus turnaround financing introduces distinct legal risks, particularly in distressed or restructuring scenarios.

Similarly, the distinction between secured and unsecured loans involves more than the presence of collateral; it also requires analysis of collateral perfection, lien priority, and enforcement rights. Interest rate structures, whether fixed or variable, should be evaluated not only for financial impact but also for their legal implications, including risk allocation and compliance considerations. Loan structures such as term loans, revolving credit facilities, and bridge loans each present unique contractual obligations, reporting requirements, and default risks that must be addressed in loan documentation. Repayment schedules, including amortization or balloon payments, further affect the timing of obligations and potential lender remedies in the event of default.

Additional considerations include industry-specific loans, which may involve regulatory and compliance frameworks unique to certain sectors, and the type of lender involved. Traditional banks, non-bank lenders, and peer-to-peer platforms differ not only in flexibility and cost but also in their approach to documentation, negotiation, and enforcement. Loan terms and covenants, such as financial ratios, use-of-funds restrictions, and prepayment penalties, must be carefully reviewed with a focus on negotiation, interpretation, and enforceability. Government-backed loans introduce statutory and regulatory requirements, while specialized features such as convertible, interest-only, or subordinated loans raise additional legal considerations related to priority, rights, and potential disputes.

This webinar takes the audience through a guided tour of loan transactions and provides them with a legal framework for analyzing commercial lending arrangements, to paint the overall landscape, to identify legal risks, interpret key loan provisions, and evaluate borrower and lender rights, and to provide a framework for understanding, to support advising clients on selecting and negotiating appropriate financing structures. Rather than focusing solely on financial concepts, the program emphasizes the legal dimensions of lending transactions, equipping the audience with the tools to assess risk, interpret documentation, and allowing attorneys to provide informed legal guidance.  

Learning Objectives:

• Differentiate Between Asset-Based and Cash-Flow Loans: Compare and contrast the key characteristics of asset-based loans (ABL) and cash-flow loans (CFL), including underwriting criteria and collateral considerations
• Identify Loan Purposes and Applications: Distinguish between loans for working capital, long-term investments, business expansion, and turnaround scenarios to match loan types with business needs
• Analyze Loan Structures and Repayment Options: Evaluate the features of term loans, revolving credit lines, bridge loans, and other structures, and their repayment schedules (e.g., amortization, balloon payments)
• Understand the Impact of Loan Terms and Flexibility: Assess the implications of fixed vs. variable interest rates, secured vs. unsecured loans, and features like interest-only or convertible loans
• Explore Industry-Specific and Government-Backed Loans: Identify loans tailored for specific industries or backed by government programs (e.g., SBA loans) and their potential benefits and limitations
• Examine Lender Types and Their Unique Offerings: Compare the characteristics of traditional banks, non-bank lenders, peer-to-peer platforms, and their suitability for various borrowers
• Interpret Loan Covenants and Restrictions: Analyze common loan terms, including financial covenants, use-of-funds restrictions, and prepayment penalties, and their impact on borrowers
• Apply a Framework for Selecting the Right Loan and Lender: Use insights from the webinar to evaluate borrowing options and identify the most suitable loan type and lender for specific business scenarios

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