Loan agreement template – what you need to know
Loan to company: Often a company will need to borrow money from individuals or other companies. This loan agreement template is a form of loan agreement under which an individual or company agrees to make a loan to a company on an unsecured basis. It includes options for the loan to be interest-bearing or interest-free and for the loan to be repaid in instalments on a monthly or quarterly basis or on a single repayment date.
Single payment: The loan agreement template provides for the amount of the loan to be drawn down in a single payment, rather than by instalments. It is not structured as a ‘facility agreement’ whereby the lender agrees to make an amount available to the borrower for a period of time for drawing down on a one-off or ‘revolving’ basis (where the loan can be repaid by instalments and subsequently drawn down again).
Immediate repayment: The loan agreement template provides that the loan will become immediately repayable by the borrower if certain events, which would affect the borrower’s ability to repay the loan, occur. For example, the borrower failing to repay any amount on the due date for payment or admitting inability to pay its debts will trigger immediate repayment.
When not to use: While the loan agreement template contains basic ‘representations and warranties’ (promises) from the lender to the borrower, it does not include some of the financial covenants that would typically be included in a loan agreement by a bank or other financial institution. It is also not intended to be used for companies to make loans to individuals, as there are specific ‘consumer credit’ rules that apply to the terms of such loans.
What does the loan agreement template include?
Key provisions: Docue's loan agreement template includes the option to include the following clauses, amongst others:
- Loan - this section sets out details of the loan being made, including the loan amount and purpose(s) the loan can be used for;
- Interest - this section sets out whether any interest is payable on the loan amount (i.e. whether the loan is interest-bearing or interest-free). It also includes a clause relating to interest on late payments;
- Repayment - the section sets out the terms on which the loan being made under the loan agreement must be repaid, including if it is being repaid in a single sum or in instalments;
- Representation and warranties - this section includes the option to include warranties and representatives from the borrower that may give the lender additional assurance about the loan being made and the borrower's ability to repay it;
- Events of default - this section states that the borrower will automatically default (breach the loan agreement) if any of the listed events are to happen. Upon the occurrence of an event of default, the lender has the option to call in the loan immediately and terminate the agreement; and
- General - this section includes a number of other legal terms that are common in English law contracts, including: governing law and jurisdiction, counterparts, notices, variation and waivers.
Docue’s loan agreement template adapts to your needs
Easy to use: With Docue, you can create a top-quality loan agreement in minutes. The loan agreement template includes model clauses designed by business lawyers to help you draft the contract yourself and tailor it to your needs. The loan agreement will be fully customised in live time based on the answers you provide to the questions.
Guidance notes: Lawyer-drafted guidance notes are there to guide you through the contract creation process and help you know which answers to pick for your situation.
Full contract process: Signatures can be collected electronically, and all contracts you make are saved in your company's own contract account.
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