A Loan Agreement is a legal contract signed between a borrower and a lender, in which a borrower receives a loan from a lender and is legally bound to pay it back. The purpose of the contract is to formalize all regulations concerning the receiving of the loan and paying it back, and state all of the terms that the parties have agreed on.
Different types of Loan Agreements can be distinguished depending on the parties that are entering the contract and its purpose. They can include:
A Loan Agreement template can be downloaded below or you can make your own using our online form builder.
Sometimes the borrower requires an extremely large loan from the bank, and when this happens the bank seeks assistance. They sign a Loan Participation Agreement with other banks or financial institutions, in which they make them their co-lenders in that loan. In this case, the leading bank shares the risks and profits with other lenders that have signed the contract and became lenders.
Using this kind of contract has a lot of benefits for each party involved. The borrower receives their large loan, the leading bank receives the opportunity to give the loan (sometimes they have to refuse it since the loan is too big and lose the client), and the other lenders can participate in the loan and get profit out of it.
Writing a legal contract is always a time-consuming process. In order not to miss any important details the lender should include a few important parts in their Loan Agreement form, which include the following:
Parties can include other sections in the document that they have agreed on, such as severability, information about representatives, fees and expenses, successors, remedies, governing law, etc.
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