Non-Disclosure Agreement in Secured Loan Transactions

Summary

This practice note addresses non-disclosure agreements in the context of a secured loan transaction. In determining whether to extend a loan or loan commitment to a borrower, the lender will need to review the books, records, financial statements and other information of the borrower during its due diligence process. Given that confidential information regarding the borrower, its business, its financials and its customers will be disclosed during this process, the borrower should request that the lender execute a non-disclosure agreement (NDA) prior to beginning its due diligence and before the borrower discloses any of its confidential information.