Loan Agreements, also called Facility Agreements, is an agreement between two parties where one party (the Lender) agrees to lend money to the other party (the Borrower).
A Loan Agreement is essential for a Lender to be able to enforce the terms of the loan and to show that the loan was not a gift.
There are two types of loan agreements: Secured Loan Agreements and Unsecured Loan Agreements.
A Secured Loan means that the Lender’s money is secured by the Security, and the Lender can sell the Borrower’s asset(s) to recover its money if the Borrower is in default.
On the other hand, an Unsecured Loan means that there is no security against the loan if the Borrower ends up in default.
A Loan Agreement is a complicated document and we would definitely suggest engaging a lawyer to prepare the loan documents.
Some of the key terms of a Loan Agreement are as follows:
· The Purpose of the loan.
· Default Interest.
· Personal Guarantee.
· Repayment dates.
Default is not just a failure to make any repayment, it is a failure to fulfill any legal obligation under the terms of the loan. It is important to review the loan agreement and to ensure that you understand what actions may constitute a default.
Contact us today if you need assistance with reviewing or issuing a Loan Agreement. We will be able to assist with ensuring that all required terms and conditions are included in the Loan Agreement and that you fully understand your legal obligations under the agreements.