Loan Agreement
This Loan Agreement (the "Agreement") is made between [Lender name (person or company)], of [Lender address] ("Lender"), and [Borrower name (person or company)], of [Borrower address] ("Borrower"). Lender has agreed to lend and Borrower has agreed to borrow [Loan amount] on the terms below. Lender and Borrower are each a "Party" and together the "Parties".
1. The Loan and Disbursement
Subject to the terms of this Agreement, Lender shall lend Borrower the principal sum of [Loan amount] (the "Loan"). Lender shall disburse the Loan on or before [Disbursement date] by [How the loan is disbursed]. Lender’s obligation to disburse is conditioned on Borrower having signed this Agreement and any document securing it, and on Borrower’s representations in Section 6 being true on the date of disbursement.
Borrower shall use the Loan only for the following purpose: [Purpose of the loan]. Lender is not required to monitor the use of the Loan, and Borrower’s use of it for another purpose is an Event of Default.
2. Interest
The unpaid principal of the Loan shall bear simple interest from the date of disbursement at the rate of [Annual interest rate (%)] percent per year, calculated on the actual number of days elapsed over a 365-day year. Interest does not compound. In no event shall the interest charged exceed the maximum rate permitted by applicable law; any excess shall be applied to principal and, once the principal is paid, refunded to Borrower.
3. Repayment
Borrower shall repay the Loan as follows: [Repayment schedule].
(a) If monthly installments: Borrower shall pay [Monthly installment (or $0 for single payment)] on [First payment due] and on the same day of each month after that until [Maturity date] (the "Maturity Date"), when the entire unpaid principal, accrued interest and all other amounts due shall be paid in full.
(b) If a single payment: the entire principal, accrued interest and all other amounts due shall be paid in full on the Maturity Date.
Payments shall be made in immediately available funds to the account Lender designates in writing. Each payment shall be applied first to late fees and costs then due, then to accrued interest, then to principal. If any payment is not received within [Grace period before a late fee (days)] days after its due date, Borrower shall pay a late fee of [Late fee per missed payment] for that payment, which compensates Lender for administrative cost and is not interest.
4. Prepayment
Borrower may prepay the Loan in whole or in part at any time without premium or penalty. Partial prepayments are applied to principal and do not postpone or reduce any scheduled installment unless Lender agrees in writing. Interest ceases to accrue on any amount on the day it is paid.
5. Security
The Loan is: [Secured or unsecured]. If secured, the collateral is: [Collateral description (or "None")] (the "Collateral"). Borrower grants Lender a continuing security interest in the Collateral and all proceeds of it to secure every obligation under this Agreement, and shall sign and deliver any security agreement, financing statement, deed of trust or title document Lender reasonably requests to perfect and maintain that interest. If the Loan is unsecured, this Section does not apply.
6. Representations of Borrower
Borrower represents to Lender, on the date of this Agreement and on the date of disbursement, that: (a) Borrower has full power and authority to enter into and perform this Agreement, and if Borrower is an entity, the person signing has been duly authorized; (b) this Agreement is Borrower’s valid and binding obligation; (c) entering into this Agreement does not violate any law, court order or other agreement binding on Borrower; (d) all financial and other information Borrower gave Lender in connection with the Loan is true and complete in all material respects and omits nothing that would make it misleading; (e) there is no pending or threatened lawsuit, claim or proceeding that could materially affect Borrower’s ability to repay; and (f) if the Loan is secured, Borrower owns the Collateral free of any lien other than Lender’s.
7. Covenants of Borrower
Until the Loan and all other amounts due under this Agreement are paid in full, Borrower shall: (a) pay all amounts when due; (b) notify Lender in writing within ten (10) days of any event that materially and adversely affects Borrower’s financial condition or ability to repay, including any lawsuit, tax lien, judgment or loss of the Collateral; (c) provide Lender, within twenty (20) days after a written request made no more than twice a year, financial statements or other information reasonably needed to assess Borrower’s ability to repay; (d) if the Loan is secured, keep the Collateral in good condition, insured against loss for its full value with Lender named as loss payee, and free of any other lien, and not sell, lease or move it without Lender’s written consent; (e) pay all taxes when due; and (f) comply with all laws material to Borrower’s business or the Collateral.
8. Events of Default
Each of the following is an "Event of Default": (a) Borrower fails to pay any amount within fifteen (15) days after it is due; (b) Borrower breaches any covenant in Section 7 or any other obligation under this Agreement or a document securing it, and does not cure the breach within fifteen (15) days after written notice from Lender; (c) any representation in Section 6 proves to have been false or misleading in any material respect when made; (d) Borrower becomes insolvent, admits in writing an inability to pay debts as they come due, makes an assignment for the benefit of creditors, or becomes the subject of a bankruptcy, receivership or similar proceeding that is not dismissed within sixty (60) days; (e) Borrower dies or, if an entity, dissolves, merges without Lender’s consent, or sells substantially all of its assets; (f) a judgment or tax lien is entered against Borrower and not satisfied or stayed within thirty (30) days; or (g) Borrower defaults under any other loan or material agreement in a way that permits the other party to accelerate its debt.
9. Remedies
Upon an Event of Default, Lender may, by written notice to Borrower, declare the entire unpaid principal, accrued interest and all other amounts due under this Agreement immediately due and payable, and no further disbursement is required. From the occurrence of an Event of Default until it is cured or the Loan is paid in full, the unpaid balance shall bear interest at the rate in Section 2 plus five (5) percentage points per year, but never more than the maximum rate permitted by law. Lender may set off any amount due against any amount Lender owes Borrower, exercise every right of a secured party in the Collateral, and pursue any other remedy available at law or in equity. Lender’s rights are cumulative, may be exercised singly or together, and are not waived by any delay or partial exercise.
10. Costs and Expenses
Borrower shall pay on demand all reasonable costs Lender incurs in enforcing or collecting this Agreement or protecting the Collateral after an Event of Default, including collection agency fees, court costs and reasonable attorney fees, whether or not a lawsuit is filed and including any bankruptcy or appellate proceeding. Each Party otherwise bears its own costs of preparing this Agreement.
11. Notices
Notices under this Agreement shall be in writing and are effective on personal delivery, on delivery by email to the addresses in the execution record with confirmation of receipt, or on the next business day after being sent by overnight courier to the addresses stated above. A Party may change its address by notice to the other.
12. Assignment; Successors
Lender may assign this Agreement and the Loan, in whole or in part, without Borrower’s consent, and shall notify Borrower of any assignment. Borrower may not assign or delegate any obligation under this Agreement without Lender’s written consent. This Agreement binds and benefits the Parties and their heirs, personal representatives, successors and permitted assigns.
13. Governing Law; Entire Agreement; Severability
This Agreement is governed by the laws of the State of [Governing law (state)], without regard to its conflict-of-laws rules. It, together with any security document signed under it, is the entire agreement between the Parties about the Loan and supersedes all prior negotiations and writings. It may be amended, and any provision may be waived, only in a writing signed by both Parties. If any provision is held invalid or unenforceable, it shall be enforced to the fullest extent permitted and the remainder remains in effect. Time is of the essence.
14. Electronic Signatures; Counterparts
This Agreement may be signed electronically and in counterparts, each of which is an original and all of which together are one instrument. The electronic execution record, timestamps and document fingerprints kept by the signing platform are conclusive evidence of execution. Each person signing represents that they are authorized to bind the Party for whom they sign.
Signatures
Lender · Borrower