Company and investment
Loan agreement
The paper behind money lent and expected back. It names the amount and how it is drawn, the interest and how it is calculated, the repayment schedule, and any security given. Its serious half is the back end: what counts as an event of default, what the lender may do when one happens, and what the borrower promises to keep doing while the loan is outstanding. Consumer lending is separately regulated almost everywhere, and business lending is regulated in some places too.
- In the catalogue
- Company and investment
- Where it can live
- Any of the 184 governing laws
Who uses one
- Businesses borrowing from a lender other than a bank.
- Companies lending within a group or to a related party.
- Directors or shareholders putting money into a company on terms.
What you are deciding
- The amount, and how and when it is drawn
- The interest rate, and how it is calculated
- The repayment schedule, and whether early repayment is allowed
- What the money may be used for
- What security or guarantee stands behind it
- What the borrower promises to keep doing
- What counts as default, and what the lender may then do
- Which legal system governs it
Blanks you leave stay blank and wait in the room. Nothing is filled in from a guess.
The sections a draft usually has
- 1The parties
- 2The facility and drawdown
- 3Interest
- 4Repayment and prepayment
- 5Purpose
- 6Security
- 7Undertakings
- 8Events of default
- 9Remedies
- 10Governing law
A general outline, not a required one. What turns up in a draft follows what you described. A contract is written in the order a contract is read.
What people call it
The names this kind of paper goes by. They are here because people search for them. They also filter the catalogue. They are not a wordlist the door matches. At the composer you describe the deal in your own words instead.
- loan agreement
- business loan agreement
- facility agreement
- credit agreement
- lending contract
- intercompany loan agreement
Questions people ask
- What is the difference between a loan agreement and a promissory note?
- A loan agreement is a two-sided contract with obligations on both parties; a promissory note is a one-sided promise to pay. Larger loans usually use an agreement, sometimes with a note alongside it.
- Is lending regulated?
- Lending to consumers is regulated in almost every jurisdiction, and some regulate business lending too. Whether a licence or specific disclosures are required is a question for local law.
- What are undertakings in a loan agreement?
- Promises the borrower makes for as long as the money is outstanding — providing accounts, not taking on other debt, keeping insurance. Breaking one is commonly an event of default.
General answers about the document. Not advice about your situation. Not written about any one country.
Where it lives
A contract names the legal system it is governed by. That is a separate decision from which paper it is. You pick it at the door, from any of the 184 units in Governing law, including England and Wales, Delaware, California and New York.
You do not start from this page. Describe the deal in one sentence at the door. Read the draft back in plain language, in the order a contract is read.
Start it at the door →Related kinds