A Commercial Loan Agreement is an agreement between a Lender (eg: a bank) and a Borrower. The Commercial Loan Agreement is a formal way of setting out the terms and conditions of the loan.
The Commercial Loan Agreement addresses what the rights are of the parties, the details of the amount being borrowed, when it will be repaid and what interest the lender would like paid to them.
The lender may be a human or a company. The Borrower can be a human or a company. The Commercial loan agreement can be used for intercompany loans also – from one company to a related company.
Because of the freedom to determine when repayments are made, it is also possible for the Commercial Loan Agreement to be used as an “at call” loan, where it is payable on demand if that is what the Lender chooses.
It is important that the Borrower fully understands the nature of what they are getting into as the consequences of not repaying can be very serious.
The beauty of the Commerical Loan Agreement is that you can design it to suit your circumstances. What if you don’t know the amount that you are lending? That’s ok. If you don’t know you can leave it as the default answer; “as lent from time to time”. This gives you some wiggle room.
Or sometimes you might not want to set a specific date in the agreement. You can leave it as the default answer; “payable on demand as demanded by the Lender”. Or you can put in an actual date, or you can add the instalment dates or time periods.
With your interest, you have a few options too. You can charge Nil, or leave it open to be decided in writing later (“as demanded from the lender from time to time”) or a flat rate or varying rate.
Some people argue that children are never a good financial investment. However, we are seeing a growing trend of a child lending money to parents to get into a good retirement home. In that case, the child should build this Commercial Loan Agreement. When mum and dad die the other children can’t argue that the loan was just a gift to dad and mum. Secondly, if mum and dad go hostile, lose their money or marry a gold digger then at least you get back some or all of the money, as it is a legally documented loan.
This Loan Agreement allows you to lodge caveats and encumbrances over the Borrower’s assets.
If the Lender wishes, the Lender can add some additional people to guarantee the repayment of the loan.
1. The Loan Agreement Document
2. Our law firm’s letter of advice on our law firm’s letterhead and signed by one of our Partners.
You are dealing directly with a law firm’s website, therefore you:
You are building your Commercial Loan Agreement on a law firm’s website. Telephone us anytime for legal advice. We can help you answer the questions.
Adjunct Professor, Dr Brett Davies, CTA, AIAMA, BJuris, LLB, Dip Ed, BArts(Hons), LLM, MBA, SJD
Legal Consolidated Barristers & Solicitors
National law firm
National: 1800 141 612
Email: [email protected]
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What do I get?
Commercial Loan Agreement Document
Our law firm’s letter of advice on our law firm’s letterhead and signed by one of our Partners.
If you do know but are paying it in instalments, then put it all in as one figure.
Otherwise, just put in the total figure. Remember to put in the dollar sign.
If you want it all paid back on the one date, just enter that date in.
If it is being paid back in instalments, you can word it how you like. for example
1) “Payable in instalments of 10% per calendar month”
2) “Half to be paid on 21 September 2018, and the remainder to be paid on 21 September 2019”
3) “$100 to be repaid weekly for 10 weeks starting from 4 July 2018”
1) If you are charging no interest, put the word “Nil”
2) If you aren’t sure what the interest rate is yet, leave it as the default, which is “as demanded from the lender from time to time”
3) You can put in a flat rate, for example, “5%” (don’t forget to put the % sign in)
4) Keep it variable, for example, “2% above the Commonwealth Bank interest rate”.
5) You can also use the inflation rate. You could word it something like “calculated according to the percentage increase in the Consumer Price Index (all groups) for the average of the capital cities of the Commonwealth of Australia (as published from time to time by the Australian Bureau of Statistics or body that takes over that function)”.