Loan Agreement Templates
Sometimes businessmen can’t meet his expenses. To fulfill this deficit, they borrow from another financial institution to meet the needs. A Loan Agreement is indenture between debtor and creditor or it is mutual promise between both parties. This type of loans can be filed after completion of all the requirements of creditor. There are many types of Loan Agreements like, facilities agreements, revolvers agreements, or working capital loans. Prior to entering in such type of agreement, creditor will check the credit worthiness, cash flow, or any collateral against loan is very crucial. Lender will determine under what conditions, he will ready to advance credit.
Loan Agreement Guidelines
So, Loan Agreement, just like any other contract, reflect offer and their acceptance. Loan can be grant if the terms and conditions are lawful. Acceptance of Loan Agreement is important like the other agreements. If the Loan Agreements offered by banks are different from the agreements offered by finance companies. In this situation banks receive banking carter and granted as a privilege and it involves public trust. You can see Loan Agreements are purely on written form, but it not enforceable by law that’s why, a Loan Agreement should not be in uttered form. The reason behind is that, agreements that are in oral form are difficult to enforce and there isn’t any evidence of these agreements. Loan Agreements are not categorized but, loan portfolios are often approximately characterized such as, personal and commercial loans. Industrial loans are that depends on the credit worthiness and its sales patron.
Importance of Loan Agreement
The Loans Agreement instigated by commercial banks, finance companies, or any other financial institution is not alike, and all have different purpose. Commercial or Saving banks allow loans that are for public reliance. Similarly, investment banks provide loans and cater the needs of investors. Security Exchange Commission supervise all the activities related to investment banking and correct, or proper disclosure are made or not.
Normally, there are two types of loans, bilateral loans, and syndicated loans. While categorizing Loan Agreements there are two categories. First one is term loan and it will be repaid in installments. Revolving loans includes maximum amount can be withdrawn any time, you have to pay per month interest on it. There are many sub categories of these loans like, interest-only loans and balloon payment loans. There are also subcategories whether the loan is secured or unsecured, whether the rate of interest is fixed or not.
Loan Agreement Format Guidelines
There are many contents of Loan Agreement. Terms of loans are different and vary in industries. The country to country terms are different. There should be mentioned the name if both parties in the agreement. Address of both parties are crucial and it should be mentioned on the Loan Agreement. If you mention the definitions or interruption provision hence it is very important. The purpose why you are allowing loan is very important to mention. There must be mentioned the re-payment provisions, payment and cancellation provisions. There must be mentioned the interest procedure of interest payment. The name of borrower and lender should be mentioned clearly. If a party default than, terms and provisions of default should be mentioned. How to avoid default should also be mentioned.
If there is any provision or penalties for damages, it should be mentioned. There must be mentioned the language provisions and set-off default also.
Free Loan Agreement Templates
Here are several free Loan Agreement Templates & Samples to assist you in drafting your own loan agreement.