Commercial Loan Agreement

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What is it?

A Commercial Loan Agreement is the basic document used by a business that borrows money on commercial terms (sometimes called "arm's length" terms) from another party (company or individual) or a business that lends money on commercial terms to another business.

Why do you need it?

A Commercial Loan Agreement sets out clearly the terms of the loan, including the responsibilities of the borrower and the rights of the lender, and the conditions upon which the loan is made.

A well-drafted Commercial Loan Agreement sets out clearly when and how the money will be repaid and gives protection to the lender upon occurrence of certain events.

Key clauses to watch for:

When drafting a Commercial Loan Agreement, it is important to focus on a number of key clauses, in particular:

  • Whether this is a secured or unsecured loan;
  • Conditions to be satisfied before the loan can be drawn;
  • Calculation of interest;
  • Details of the repayment plan; and
  • Events of default.

Commercial Loan Agreement Document

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