Free Business Loan Agreement Template

BUSINESS LOAN AGREEMENT

This Business Loan Agreement ("Agreement") is made on [DATE] between [LENDER LEGAL NAME], [ADDRESS] ("Lender"), and [BORROWER LEGAL NAME], a [STATE] [entity type], [ADDRESS] ("Borrower").

1. LOAN. Lender will lend Borrower $[AMOUNT] ("Loan"), disbursed [in a single advance on [DATE] / in advances as described in Schedule A], to be used for [PURPOSE, e.g., working capital, equipment purchase, expansion].

2. INTEREST. Interest accrues on the outstanding principal at [a fixed rate of [RATE]% per year / a variable rate equal to [INDEX] plus [MARGIN]%, adjusted [monthly]], calculated on [the actual number of days elapsed over a 365-day year]. Interest will not exceed the maximum rate permitted by law.

3. FEES. Borrower will pay: an origination fee of $[AMOUNT] ([PERCENT]% of the Loan), [deducted from the advance / paid at closing]; and no other fees except those listed here: [LIST OR "None"]. Lender will provide a written statement of the amount financed, total finance charges and, where required by state commercial financing disclosure law, an estimated annual percentage rate.

4. REPAYMENT. Borrower will repay the Loan in [NUMBER] [monthly] installments of $[AMOUNT], beginning [DATE], with any remaining balance due on [MATURITY DATE]. A repayment schedule is attached as Schedule B. Payments are made by [ACH debit from Borrower's account / other method].

5. PREPAYMENT. Borrower may prepay the Loan in whole or part at any time [without penalty / with a prepayment fee of [PERCENT]% of the amount prepaid if prepaid within [NUMBER] months]. Prepayments reduce future interest.

6. LATE PAYMENT. Payments more than [10] days late incur a late charge of [5]% of the overdue payment, within legal limits.

7. COLLATERAL [OPTIONAL]. The Loan is secured by [DESCRIBE COLLATERAL, e.g., the equipment listed in Schedule C / Borrower's accounts receivable and inventory] under a security agreement signed today. Lender may file a UCC financing statement describing only that collateral. [This Loan is not secured by a lien on all of Borrower's assets.]

8. PERSONAL GUARANTEE [OPTIONAL]. [GUARANTOR NAME] will guarantee the Loan under a separate guaranty, limited to [AMOUNT / [PERCENT]% of the outstanding balance].

9. BORROWER REPRESENTATIONS. Borrower is duly organised and authorised to enter this Agreement; the financial statements provided to Lender are accurate in all material respects; and there is no pending litigation that would materially affect Borrower's ability to repay, except as disclosed.

10. COVENANTS. While any amount is outstanding, Borrower will: (a) provide [annual financial statements within [120] days of year end / quarterly statements]; (b) maintain insurance on any collateral; (c) notify Lender within [10] days of any event that could reasonably be expected to materially impair its ability to repay; and (d) not sell or grant liens over the collateral outside the ordinary course of business without Lender's consent. [Financial covenant, if any: DESCRIBE, e.g., debt service coverage ratio of at least [1.25]x tested annually.]

11. EVENTS OF DEFAULT. An Event of Default occurs if: (a) a payment is not made within [10] days after written notice that it is overdue; (b) Borrower breaches another obligation and does not cure it within [30] days after written notice; (c) a representation was materially false when made; or (d) Borrower becomes insolvent or files for bankruptcy.

12. REMEDIES. After an Event of Default, and any applicable cure period, Lender may declare the unpaid balance due, charge default interest of up to [RATE]% per year within legal limits, and enforce its rights against the collateral and any guarantee as permitted by law. Borrower will pay Lender's reasonable collection costs. No confession of judgment is given under this Agreement.

13. NO CROSS-DEFAULT [OPTIONAL]. A default by Borrower under a different agreement with a third party is not an Event of Default unless it involves debt over $[AMOUNT] that the other creditor has accelerated.

14. GOVERNING LAW AND DISPUTES. This Agreement is governed by the laws of [STATE], and disputes will be heard in the courts of [COUNTY, STATE].

GENERAL PROVISIONS
(a) Notices. Notices must be in writing and sent to the addresses or emails above (or as later updated by notice). Email notice is effective when sent, unless the sender receives a delivery failure message.
(b) Entire agreement. This agreement, with any schedules and exhibits, is the entire agreement between the parties on its subject and replaces all prior discussions and agreements on that subject.
(c) Amendments and waivers. Changes must be in writing and signed by both parties. A failure or delay in enforcing any term is not a waiver of it.
(d) Severability. If any provision is found unenforceable, it will be limited to the minimum extent necessary and the rest of this agreement will remain in effect.
(e) Assignment. Neither party may assign this agreement without the other party's written consent, except to a successor in a merger or sale of substantially all of its business, on notice.
(f) Relationship. Nothing in this agreement creates a partnership, joint venture or agency relationship unless expressly stated.
(g) Counterparts and electronic signatures. This agreement may be signed in counterparts and by electronic signature, each of which is an original and together form one agreement.
(h) Independent advice. Each party has had the opportunity to review this agreement with its own legal counsel and signs it voluntarily.

LENDER: ______________________  Name/Title: ______________  Date: __________
BORROWER: ____________________  Name/Title: ______________  Date: __________

SCHEDULES: A Advances (if any) | B Repayment schedule | C Collateral

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This free template is provided by ClauseAudit for general informational purposes and is not legal advice. Have it reviewed before use. Replace all [BRACKETED] placeholders.