Process
Conditions precedent (CPs)
Conditions precedent are the items that must be delivered before a lender will release funds. The list looks administrative and is the single most common reason a drawdown slips past the date the money was needed.
Also called CPs · conditions to drawdown · CP list · conditions to funding
The items that delay a drawdown are rarely the complicated ones. They are the ones a third party controls.
| Category | Delay risk |
|---|---|
| Corporate documents | Routine |
| Signed finance documents | Follows completion |
| Insurance and legal opinions | Slower than expected |
| Existing lender releases | Outside your control |
| Third-party consents | The usual culprit |
Relative delay risk by category. Illustrative market convention, not measured data.
What they are and why they exist
Conditions precedent are the items a lender requires before releasing funds. They exist because credit approval was given on a set of assumptions, and the CP list is how the lender confirms those assumptions were true before the money moves.
Satisfaction is usually confirmed in a short letter from the lender's solicitors stating that the conditions have been met or waived. Until that letter exists, there is no drawdown, however complete everything else looks.
The list reads as administrative and is treated as such, which is exactly why it causes trouble. Nobody loses a deal on the CP list. Plenty of borrowers miss a completion date on it.
What is usually on the list
The categories are fairly standard across UK facilities at this size, even though the specific items vary.
Corporate items: constitutional documents, board and shareholder resolutions approving the borrowing and the security, and a certificate from an officer confirming solvency and that borrowing limits are not exceeded. Finance documents: the facility agreement, the debenture and any share charge, guarantees, and an intercreditor or priority deed where more than one lender is involved.
Then the evidential items: evidence of insurance with the lender noted, valuations where the facility is asset-backed, legal opinions where there is a foreign element, and structure charts. Finally the third-party items: consents under material contracts, landlord waivers where the lender wants access to premises holding charged assets, and releases of existing security.
Where the facility funds an acquisition, the acquisition documents themselves join the list, along with evidence that the equity funding is in place and any regulatory clearance obtained.
CPs are not a completion-week task. The items that bite need starting when the term sheet is signed.
| Category | Start |
|---|---|
| Third-party consents | Immediately |
| Lender release correspondence | Weeks 1-3 |
| Insurance and opinions | Weeks 4-7 |
| Corporate documents | Weeks 6-9 |
| Finance documents signed | Completion |
Illustrative sequence for a £3-15m facility. Timings vary with complexity and third-party responsiveness.
The items that delay you
Not the complicated ones. The ones controlled by someone with no stake in your timetable.
A landlord asked to sign a waiver has no commercial reason to hurry, and may want their own solicitor to review it at your cost. A customer asked to consent to a change of control under a material contract may treat it as an opportunity to renegotiate. An existing lender asked to confirm a redemption figure and release security has just lost the relationship and is unlikely to prioritise the paperwork.
Corporate documents and signed finance documents almost never cause delay, because your own advisers control them. Insurance evidence and legal opinions sit in between: routine, but slower than anyone expects because they involve a third party working to their own queue.
Existing security, and the charge register problem
Where a refinancing is involved, releasing the incumbent's security is a CP, and it collides with a quirk of the Companies House regime worth knowing in advance.
Filing a satisfaction on form MR04 is voluntary, so repaid charges stay on the public file indefinitely. A company that has refinanced twice can show several outstanding-looking debentures when only one secures anything. The new lender's solicitors cannot simply assume the historic ones are dead; they need confirmation from each old lender, and chasing an institution that was repaid four years ago is slow.
The way to avoid this is to clean the register before the raise rather than during it. Every unsatisfied charge needs identifying, written confirmation of release from each holder, and an MR04. Done in advance it costs almost nothing. Done during a live transaction it becomes the item everyone is waiting on.
A CP stops the money. A condition subsequent does not, which is why moving an item between the two is worth asking for.
| Type | Effect if outstanding |
|---|---|
| Condition precedent | No drawdown |
| Moved to subsequent | Funds released |
| Condition subsequent | Deliver within weeks |
General market position. Individual facilities vary.
Conditions precedent against conditions subsequent
A condition precedent blocks the money. A condition subsequent is an obligation to deliver something within a defined period after drawdown, commonly a few weeks, with failure becoming an event of default rather than a barrier to funding.
That distinction is negotiable and it is one of the more useful requests available late in a transaction. Where a landlord waiver is holding up a completion the business needs on a fixed date, asking to move it to a condition subsequent with a thirty-day delivery obligation is a reasonable ask, and lenders often accept it for items that are procedural rather than substantive.
What will not move are the items that go to the lender's core protection: the security documents, the corporate authority to grant them, and evidence that the equity is in place on an acquisition. Asking for those as conditions subsequent signals that something is wrong.
Who is responsible for what
The CP list is produced by the lender's solicitors, satisfied largely by the borrower's solicitors, and paid for by the borrower under the costs clause in the term sheet, which is usually one of the few binding provisions in it.
That structure creates a mild misalignment. The lender's solicitors have no incentive to shorten the list, and the borrower's solicitors are billing to satisfy it. Nobody in the room owns the completion date except the borrower.
So the borrower, or their adviser, should hold the tracker. A simple list of every item, who is responsible, what has been requested, and what is outstanding, circulated weekly, does more to protect a completion date than any amount of chasing at the end. It also surfaces the third-party items early, which is when they can still be fixed.
Working the list backwards
The practical method is to take the date the money is needed and work backwards, not forwards from where you are.
The CP list is available at term-sheet stage rather than only in the first draft of the facility agreement. Most lenders will provide it on request, and it costs nothing to ask. Then split it into items your side controls and items a third party controls, and start the second group immediately.
Where the funding date is immovable, as it commonly is on an acquisition, flag it early and ask which items the lender would accept as conditions subsequent if the third parties are slow. Having that conversation in week two is a negotiation. Having it in the final week is a request for a favour under time pressure, which is a materially worse position.
Common questions
What are conditions precedent on a loan?
The items a lender requires before releasing funds. They confirm that the assumptions credit approval rested on were true. Satisfaction is usually recorded in a short letter from the lender's solicitors, and until that letter exists there is no drawdown however complete everything else looks.
What is normally on a CP list?
Corporate documents and board resolutions; the signed finance documents including the debenture and any share charge; evidence of insurance, valuations and legal opinions; and third-party items such as consents under material contracts, landlord waivers and releases of existing security. On an acquisition the deal documents and evidence of the equity funding join the list.
What usually delays a drawdown?
Items controlled by someone with no stake in your timetable. A landlord has no reason to hurry a waiver, a customer asked to consent to a change of control may see an opportunity to renegotiate, and an existing lender who has just lost the relationship is unlikely to prioritise your release paperwork.
What is the difference between a condition precedent and a condition subsequent?
A condition precedent must be satisfied before any money moves, so an outstanding item stops the drawdown. A condition subsequent is an obligation to deliver within a defined period after funding, commonly a few weeks, with failure becoming an event of default instead. Moving a procedural item from the first category to the second is a reasonable ask.
Can I get an item moved to a condition subsequent?
Often, for procedural items such as a landlord waiver, particularly where the completion date is fixed. What will not move are items going to the lender's core protection: the security documents, the corporate authority to grant them, and evidence that equity is in place on an acquisition. Asking for those signals a problem.
Why are old charges on my file a problem at drawdown?
Because satisfaction filings on form MR04 are voluntary, repaid charges stay on the public register indefinitely. The new lender's solicitors cannot assume they are dead and must obtain confirmation from each old holder. Chasing a lender repaid four years ago is slow, which is why cleaning the register before a raise is worth doing.
When should I ask for the CP list?
At term-sheet stage, rather than waiting for the first draft of the facility agreement. Most lenders will provide it and it costs nothing to ask. Then split it into items you control and items a third party controls, and start the second group immediately.
Who pays for satisfying the conditions precedent?
The borrower, under the costs clause in the term sheet, which is usually one of the few binding provisions in it. The list is produced by the lender's solicitors and satisfied largely by yours, so nobody in the room owns the completion date except you. Holding the tracker yourself is the practical protection.
The full treatment sits in the guide: debt term sheet negotiation.
This page explains a term as it is used in the UK lower-mid-market. It is general information, not advice on any particular facility. Terms vary between lenders and between deals, and the drafting in your own agreement governs.