Loan agreement – this is 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.
Docue’s loan agreement template adapts to your needs
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.
Signatures can be collected electronically, and all contracts you make are saved in your company's own contract account.
Tags: loan agreement template, loan agreement, business loan agreement, loan agreement sample, simple loan agreement, loan contract
