This document review list is provided to you as a service to help you prepare for it. In this case, the terms of the financial arrangement are easy.
- Make a lot of copies of everything. Give a copy to each person or organization who is a part of the situation.
Bank Loan Agreement
Bank Loan Agreement
_____________________________, referred to as BORROWER, and _____________________________, referred to as BANK, agree:
That the BANK shall lend sums of money to the BORROWER from time to time, including:
Principal amount: $____(_____________________________&___/100 dollars)
The initial rate for the loan shall be _____%
The interest rate shall be adjusted every _______ from the closing date of the loan
The first adjustment shall take place on _______________
The overall maximum rate for the loan shall be _____%
The rate on the loan shall not be less than ____%
The reference rate used for adjustment shall be ____The advance made herein shall be evidenced by a promissory note.
The following will be the terms of repayment:The note shall be due, in full, on ___________________.
BORROWER assigns to BANK any and all deposits with BANK as additional collateral to BANK. Upon default, BANK shall be entitled to set off the deposits in satisfaction of any sum due to BANK by the BORROWER.
The BORROWER shall not use the proceeds of this loan for household, personal or family obligations.
The BORROWER represents that the loan proceeds will be used for business purposes.
The BORROWER shall maintain a life insurance policy in the following amounts related to the following individuals:
Individuals: ________________________
Amounts: The principal and interest balance then outstanding on the loan.The BORROWER shall not be required to obtain the same through BANK and may assign policies from insurers licensed to offer life insurance in the State of ___________.
The extension of credit made herein shall be secured by a lien on the following property:
_______________________________________________________________and BORROWER shall execute such financing statements and security interests as BANK may reasonably require from time to time to perfect its security interest.
Dated: ____________________________
_________________________________________________
Borrower
________________________________________________
Bank
Bank Loan Agreement
Review ListThis review list is provided to inform you about this document in question and assist you in its preparation. This is a straightforward bank loan agreement.
1. Make multiple copies. Give one copy to each related party.
Frequently Asked Questions
What is a bank loan agreement?
A bank loan agreement is a contract in which a bank agrees to lend money to a borrower under specified terms. It outlines the principal amount, interest rate, repayment schedule, and other conditions. The agreement also includes provisions for collateral and default.
What does the principal amount mean in a bank loan agreement?
The principal amount is the initial sum of money that the bank lends to the borrower. It is stated in the agreement as a specific dollar amount. This amount is separate from interest and fees.
How is the interest rate determined in a bank loan agreement?
The agreement specifies an initial interest rate and states that the rate will be adjusted periodically. It also sets an overall maximum rate and a minimum rate. The reference rate used for adjustments is also identified.
What is a promissory note in relation to a bank loan agreement?
A promissory note is a written promise to repay the loan. According to the agreement, the advance made by the bank is evidenced by a promissory note. This note serves as legal proof of the borrower's debt.
What are the repayment terms in a bank loan agreement?
The repayment terms specify that the note shall be due in full on a certain date. The agreement may also include other repayment conditions. The borrower is obligated to repay the principal and interest as outlined.
What collateral is assigned to the bank in this agreement?
The borrower assigns to the bank any and all deposits held with the bank as additional collateral. This means the bank can use those deposits to satisfy any sums due if the borrower defaults. The agreement includes a set-off provision for this purpose.
Can the loan proceeds be used for personal purposes?
No, the borrower shall not use the proceeds of this loan for household, personal, or family obligations. The borrower represents that the loan proceeds will be used for business purposes only. This restriction is explicitly stated in the agreement.
What happens if the borrower defaults on the loan?
Upon default, the bank is entitled to set off the deposits in satisfaction of any sum due. This means the bank can use the borrower's deposits to recover the outstanding debt. The agreement provides this remedy to the bank.
How often is the interest rate adjusted?
The interest rate is adjusted every specified period from the closing date of the loan. The first adjustment date is also stated in the agreement. The exact frequency is left blank to be filled in by the parties.
What is the maximum interest rate allowed under this agreement?
The agreement sets an overall maximum rate for the loan. This cap ensures that the interest rate will not exceed a certain percentage. The specific maximum rate is to be filled in the blank provided.
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