What is a Loan Agreement?

A Loan Agreement is an agreement between a Lender (eg: a bank) and a Borrower. This Loan Agreement is a formal way of setting out the terms and conditions of the loan.

The 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. This loan agreement can be used for inter company loans also – from one company to a related company.

Because of the freedom to determine when repayments are made, it is also possible for this 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.

What are the terms of the agreement?

The beauty of this document 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 word it just with one 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.

What does this document contain?

The Loan Agreement Document
Our law firm’s letter of advice on our law firm’s letterhead and signed by one of our Partners.

Why is it better to prepare my legal document on a law firm’s website?

You are dealing directly with a law firm’s website, therefore you:

  1. retain legal professional privilege,
  2. benefit directly from the law firm’s PI insurance
  3. receive legal advice from us.
  4. You are supported by our 100% money back guarantee on every document you build.

Contact us for more legal advice.

You are building your legal document on a law firm’s website. You can telephone us any time to get 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
Mobile:       04777-96959
National:    1800 141 612
Email:         brett@legalconsolidated.com
Skype:        brettkennethdavies

See also:

spouse loan agreementhttps://www.legalconsolidated.com.au/spouse-loan-agreement/

1Who is the Borrower?

The Borrower is the entity (human or company) who is going to receive the capital (e.g. money) from the lender.

2Who is the Lender?

The Lender is the entity (human or company) who is passing the capital (e.g. money) to the Borrower.
In this Loan Agreement, the person who is the Lender is lending the money and the person who is the Borrower is the person borrowing the money.

3What do I get?

Why is it better to prepare my legal document on a law firm's website?
You are dealing directly with a law firm's website, therefore you:

  1. retain legal professional privilege,
  2. benefit directly from the law firm's PI insurance
  3. receive legal advice from us.
  4. You are supported by our 100% money back guarantee on every document you build.

How do I build the Loan Agreement?

Answer the questions on our website
Read the Summary page
Lock and Build your document
Type in your Credit Card details
The Loan Agreement, our covering letter and Tax Invoice are emailed to you
Print and sign the Agreement
What do I get?

The legal document that is emailed to you contains:

Loan Agreement Document
Our law firm's letter of advice on our law firm's letterhead and signed by one of our Partners.


4I don't know how much I'm lending.

Sometimes you don't know the amount that you are lending. 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.

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.


5What if I don't have a payment date?

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". This gives you some wiggle room.

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"


6What do I put in as the interest rate?

There are five ways you can answer this question depending on how you'd like to do it:

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)".