Common Loan Agreement

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Common Loan Agreement

Depending on the amount of money borrowed, the lender may decide to have the agreement approved in the presence of a notary. This is recommended if the total amount, the capital plus interest, is more than the maximum acceptable rate for the small claims court in the jurisdiction of the parties (usually 5,000 usd or 10,000 USD). With each loan agreement, you will need some basic information that is used to identify the parties who agree to the terms. They have a section in which they indicate who the borrower is and who the lender is. In the borrower`s section, you must include all the borrower`s information. If you are an individual, this includes their full legal name. If it is not an individual, but a business, you must include in your name the name of the company or the company name that must contain “LLC” or “Inc.” to provide detailed information. They must also provide their full address. If there is more than one borrower, you should include the information of both in the loan agreement.

The lender, sometimes designated as the holder, is the person or company that will make the property, money or services available to the borrower as soon as the agreement has been agreed and signed. Just as you have recorded the borrower`s information, you must include the lender`s information with as much detail. Availability: The borrower should check whether the facilities are available when the borrower needs them (for example. B to finance an acquisition). Lenders often start with the fact that they need two or three days in advance before the facilities can be used or used. This can often be reduced to one day or even, in some cases, to a certain period of time on the day of use. The lender must have sufficient time to process the credit application and, if there are multiple lenders, it usually takes at least 24 hours. Prepayment penalties are fees that the bank charges, you must repay your credit in a lump sum. Prepayment penalties are usually described in the positive or negative pacts section, or they have their own full section. The lender should only have the right to demand repayment of the loan in the event of a delay and lawsuit. If the delay default has been corrected or reversed, the lender`s right to accelerate should cease.

Wolfe noted that much of a small business loan contract could be negotiated with the lender. You may need a lawyer to lead the negotiations, but he can help a lawyer verify your agreement before signing. Interest is due at the end of each interest period, interest periods may be fixed periods (usually one, three or six months) or the borrower can choose the interest period for each loan (the options are usually one, three or six months). These fees may look like a penalty, although you keep your promise to repay the loan, but they can often protect banks. Wolfe said it was important for entrepreneurs to take into account that if the loan is the primary line of credit or the type of financing, it is probably a large sum for the bank.