Commercial Loan Agreement

What is a Commercial Loan Agreement?

A Commercial Loan Agreement is an agreement between a Lender (e.g. a bank, a dad) 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 sets out:

• the rights of the parties
• the amount borrowed
• when it is repaid
• the interest rate the Lender charges (like a bank loan this can fluctuate as the Lender directs, from time to time)

Is the Lender a Human, Company or a Trust?

The Lender may be a human or a company. And the human or company may be acting as a trustee of a trust. This includes family trusts and unit trusts.

For free start building the Loan Agreement. When you get to that question read the free hints. The free building process is educational. It answers most questions. Try building the document first before you reach out for help from us. Once you have answered as many questions then you are welcome to telephone the law firm.  But do your homework first. This is by reading the free sample PDF above. And going through the questions and answers.

Can the Borrower be a Human, Company or Trust?

It is best to start the free building process. It answers these questions.

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.

I want an ‘at call’ loan as I will be lending money from time to time.

Look, rather than ask these same questions, that everyone always asked, it is best to just start building the Loan Agreement. It is a free service. You are only invited to buy the document once you answer all the questions.

The questions and answers carefully take you on an educational journey. A free journey.

The Lender often wants the freedom to:

• lend different amounts of money, at different times
• call in the money, at any time

Depending on how you answer the questions you can have an “at call” loan. The Lender can then call in the loan at any time. This is how banks draft their loans and mortgages. It is the most common of all commercial loan agreements.

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 Commercial Loan Agreement?

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.

Lending money to mum and dad to move into aged care

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.

Lending money with security

This Loan Agreement allows you to lodge caveats and encumbrances over the Borrower’s assets. Start the free building process to see the full hints on this.

Can I add some Guarantors?

If the Lender wishes, the Lender can add some additional people to guarantee the repayment of the loan. Start the free building process to see the full hints on this.

What does this Commercial Loan Agreement contain?

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.

Contact us for more legal advice on building the Loan Agreement

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.

But go through the building process first. It educates you. When you have answered as many questions as you can, then telephone us and we can go through the answers with you.

Adjunct Professor, Dr Brett Davies,  CTA, AIAMA, BJuris, LLB, Dip Ed, BArts(Hons), LLM, MBA, SJD
Legal Consolidated Barristers & Solicitors
National Australian law firm

[faq title=”” open1st=”0″ openAll=”0″]

[faq_item title=”Who is the Borrower?” number=”1″]
The Borrower is the entity (human or company) who is going to receive the capital (e.g. money) from the lender.
[/faq_item]
[faq_item title=”Who is the Lender?” number=”2″]
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.
[/faq_item]
[faq_item title=”What do I get?” number=”3″]
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 Commercial 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:

Commercial Loan Agreement Document
Our law firm’s letter of advice on our law firm’s letterhead and signed by one of our Partners.
[/faq_item]
[faq_item title=”I don’t know how much I’m lending.” number=”4″]
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.
[/faq_item]
[faq_item title=”What if I don’t have a payment date?” number=”5″]
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”
[/faq_item]
[faq_item title=”What do I put in as the interest rate?” number=”6″]

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)”.
[/faq_item]
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