What is a Business Loan Agreement?

Commercial lending contract between borrower and lender, establishing loan amount, interest rates, repayment terms, collateral requirements, and default procedures for business financing arrangements.

What should a Business Loan Agreement include?

Whereas, Signatures In Witness Whereof.

When do I need a Business Loan Agreement?

Securing working capital or expansion funding for business operations and growth. Formalizing lending arrangement with banks, credit unions, or private lenders. Establishing clear repayment terms and interest rates for business borrowing. Documenting collateral and personal guarantees required for commercial loan approval. Creating enforceable loan structure that protects both borrower and lender interests.

Free Business Loan Agreement Template | Download & Customize

BUSINESS LOAN AGREEMENT

THIS AGREEMENT is made on [Date],
BETWEEN:
[Lender Name], of [Lender Address] (the "Lender")
AND
[Borrower Name], of [Borrower Address] (the "Borrower")

WHEREAS

The Borrower has requested a loan from the Lender for business purposes.
The Lender has agreed to provide such a loan to the Borrower, subject to the terms and conditions set out in this Agreement.

NOW, THEREFORE, in consideration of the mutual covenants and promises herein, the parties agree as follows:

1. Loan Amount and Disbursement

1.1 The Lender agrees to loan the Borrower the principal sum of [Loan Amount] (the "Loan").

1.2 The Loan will be disbursed to the Borrower’s designated account as follows:
Bank Name: [Borrower Bank Name]
Account Number: [Borrower Account Number]
Date of Disbursement: [Disbursement Date]

2. Interest Rate

2.1 The Loan shall bear interest at a rate of [Interest Rate]% per annum, calculated on the outstanding principal balance.

2.2 Interest shall accrue from the date of disbursement until the Loan is repaid in full.

3. Repayment Terms

3.1 The Borrower shall repay the Loan as follows:

Repayment Schedule: [e.g., Monthly/Quarterly/Annually]
Installment Amount: [Installment Amount]
First Payment Due: [First Payment Date]
Final Payment Due: [Final Payment Date]

3.2 Early repayment of the Loan, in whole or in part, is [permitted/not permitted] without penalty.

3.3 All payments shall be made to the Lender at [Lender Payment Address/Account Details] or as otherwise directed in writing.

4. Use of Loan Proceeds

4.1 The Borrower shall use the Loan exclusively for the following business purpose(s):
[Describe Intended Use of Funds]

5. Representations and Warranties

5.1 The Borrower represents and warrants that:

It is duly organized and validly existing under the laws of [State/Country of Incorporation].
The execution and delivery of this Agreement have been duly authorized.
This Agreement constitutes a binding obligation of the Borrower.

6. Covenants

6.1 The Borrower agrees:

To use the Loan for the stated business purposes only.
To provide the Lender with financial statements and other information as reasonably requested.
Not to incur additional debt or grant security interests in its assets without the Lender’s prior written consent.

7. Default

7.1 An Event of Default occurs if:

The Borrower fails to make any payment when due.
The Borrower becomes insolvent or bankrupt.
Any representation or warranty made by the Borrower proves to be false or misleading.

7.2 Upon an Event of Default, the Lender may:

Declare the entire outstanding Loan amount and accrued interest immediately due and payable.
Exercise any other rights available at law or in equity.

8. Security

8.1 [If applicable: The Loan is secured by the following collateral: [Describe Collateral].
If not applicable, state: This is an unsecured loan.]

9. Notices

9.1 Any notice under this Agreement shall be in writing and delivered to the respective addresses of the parties set out above or to such other address as may be notified in writing.

10. Governing Law

10.1 This Agreement shall be governed by and construed in accordance with the laws of [Governing Law State/Country].

11. Amendment and Assignment

11.1 No amendment or modification of this Agreement shall be valid unless made in writing and signed by both parties.

11.2 Neither party may assign its rights or obligations under this Agreement without the prior written consent of the other party.

12. Entire Agreement

12.1 This Agreement constitutes the entire understanding between the parties and supersedes all prior agreements, representations, or understandings.

13. Severability

13.1 If any provision of this Agreement is held to be invalid or unenforceable, the remaining provisions shall remain in full force and effect.

14. Counterparts

14.1 This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together constitute one and the same instrument.

Disclaimer

This document is a template and may not be suitable for all situations. The parties should consult with legal counsel before signing this agreement.

SIGNATURES

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

LENDER:
Signature: ___________________________
Name: [Lender Name]
Title: [Lender Title]
Date: ___________________

BORROWER:
Signature: ___________________________
Name: [Borrower Name]
Title: [Borrower Title]
Date: ___________________

Business Loan Agreement