Commercial Loan Agreement

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What is it?

A Commercial Loan Agreement is the basic document used by a company that lends money on commercial terms to another party (company or individual) and for a situation where a company is borrowing money on commercial terms from another company or fund. It sets out the terms and conditions under which the company is prepared to make a loan available to a borrower.

Why do you need it?

A Commercial Loan Agreement clarifies the responsibilities of the borrower and the lender, helping both parties more closely monitor the condition of the loan. This agreement can enhance a borrower/lender relationship because it encourages and promotes more frequent communications between the parties.

A well-drafted Commercial Loan Agreement is required to have a written payment plan for the borrower to repay the amount back in instalments over a predetermined time period.

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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