Loan Agreement Template
A straightforward agreement for lending or borrowing money between two parties. Ideal for founder loans, business partnerships, or private lending.
Preview
How to use this template
- Fill in the loan amount, interest rate, and repayment terms.
- Review the generated clauses to ensure they meet your needs.
- Download the document as a PDF or copy the text.
- Sign the agreement with the other party to make it official.
When to use this template
Use a loan agreement whenever money is lent, even between friends, family or a founder and their own company. It records the amount, the interest, how and when it is repaid, and what happens if payments are missed.
A written loan agreement also helps with your bookkeeping and taxes, because it shows that the money is a loan and not a gift or an investment.
Check before you sign
- The interest rate is within the legal maximum where you are; some places have strict limits.
- The repayment schedule is affordable and the dates are realistic.
- Both parties understand what counts as a default and what happens then.
- If the loan needs security, such as a guarantee or collateral, that is arranged in a separate document.
- You have asked an accountant how the interest is taxed.
Full text of the loan agreement template
This is the complete template. Words in [brackets] are filled in automatically when you use the form above; where the template has options, the form shows only the one you choose.
LOAN AGREEMENT
1. Loan Amount
This agreement is made on [Effective date] between [Lender name], located at [Lender address] ("Lender"), and [Borrower name], located at [Borrower address] ("Borrower").
The Lender agrees to lend the Borrower the principal sum of [Loan amount] [Currency], which shall be paid to the Borrower on the effective date.
2. Interest
The outstanding balance of the loan will accrue interest at a rate of [Interest rate]% per year, calculated based on a 365-day year.
If this interest rate exceeds the maximum rate permitted by applicable law, the rate shall be automatically reduced to the maximum legal limit.
3. Repayment Terms
If you choose: Monthly installments
The Borrower shall repay the loan in monthly installments of [Monthly installment] [Currency], starting on [First installment date]. Any remaining balance of principal and interest must be paid in full by [Final due date].
If you choose: One payment on the due date
The Borrower shall repay the full principal amount plus all accrued interest in one single lump-sum payment on [Final due date].
4. Application of Payments
All payments made by the Borrower will be applied first to any accrued and unpaid interest, and then to the remaining principal balance.
5. Prepayment
The Borrower has the right to pay back all or any part of the loan before the scheduled due date without any prepayment penalties or fees.
6. Events of Default
The Borrower will be in default if any of the following occur: (a) A payment is more than [Days late before default] days overdue; (b) The Borrower becomes insolvent or files for bankruptcy; (c) The Borrower provided false or misleading information in this agreement.
In such an event, the Lender must provide written notice of the default to the Borrower.
7. Remedies on Default
Upon a default, the Lender may declare the entire remaining balance of principal and interest immediately due and payable, subject to applicable law.
Where permitted by law, the Borrower agrees to pay the Lender's reasonable costs associated with collecting the overdue amount.
8. No Security
This loan is unsecured. No assets are pledged as collateral unless the parties agree otherwise in a separate written and signed document.
9. Governing Law
This agreement shall be governed by and interpreted in accordance with the laws of [Governing law].
10. General Provisions
This document constitutes the entire agreement between the parties and replaces all prior discussions or arrangements. Any changes to this agreement must be made in writing and signed by both parties.
If any part of this agreement is found to be unenforceable, the rest of the contract remains in full effect. The failure of either party to enforce a right under this agreement does not mean they waive that right in the future.
Signatures
Lender
Signature: ____________________
Name and title: ____________________
Date: ____________________
Borrower
Signature: ____________________
Name and title: ____________________
Date: ____________________
Frequently asked questions
What is this contract for?
This agreement is used when one party lends a specific amount of money to another party. It outlines how the money will be paid back and what happens if a payment is missed.
What should this document include?
It should clearly state the principal amount, the interest rate, the repayment schedule, and the governing law of the jurisdiction where the parties operate.
Is this template legally binding?
This is a general template and does not constitute legal advice. While it can become binding once signed, you should have a lawyer review it to ensure it fits your specific situation and local laws.
What is the difference between a loan agreement and a promissory note?
A loan agreement is a detailed contract that outlines all terms and conditions for both parties. A promissory note is a simpler document where the borrower promises in writing to pay back a specific sum.
Can I edit the text?
Yes. Once you download or copy the text, you can modify any clause to better suit your specific business arrangement.
Is my data stored?
No. All information you enter into the form stays in your browser and is not stored on our servers.
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