About this unsecured loan agreement
A verbal agreement may be enough to lend small amounts to people you trust, but even among family and friends, a formal record of terms will prevent a disagreement later. Where the risk of default is higher, or the arrangement is more complicated, it is essential to record the arrangement in a document like this one.
There is no standard loan agreement template that fits all loans with no editing. But this document is very flexible. You will be able to create a short, simple agreement when the amounts are small and the parties are trusted. When the terms are more complex and sums greater you’ll find a large menu of provisions to suit your needs without needing to worry about the legal wording.
Using this agreement, whether you are loaning money to a friend or borrowing a director’s loan from your company, both sides will feel safe knowing that the terms are recorded, confident that the deal is fair, and happy to carry it out to the end.
It simply isn’t worth taking the risk of fallout from inadequate record.
The law in this unsecured loan agreement
There is little statutory regulation relating to an agreement of this nature, so the parties can make, more or less, the deal they choose. We have included a very large choice of variables particularly around repayment of the loan so that you can draw your agreement to suit exactly what you want without reducing the legal effect of the rest of it.
Drawn outside the Consumer Credit Act 1974, this agreement is not suitable for companies in the business of lending or providing credit to consumers.
When to use this unsecured loan agreement
- The lender and the borrower may be a business or an individual
- Suitable where a company lends to a director or employee
- Suitable for personal loans to family and friends
- Either or both parties may be in the UK or abroad
- Flexible for loans of any size and repayment terms of any complexity
Agreement features and contents
- Standard terms to protect both parties, especially the lender
- Comprehensive provisions menu from which you can choose
- Provides for alternative draw down arrangements and provision of information to the lender
The contents of the agreement include:
- Structure of the loan;
- Alternative draw down arrangements;
- Provisions of information to lender;
- Repayment and interest payment arrangements;
- Method of payment;
- Provision for default situations;
- Borrower's warranties;
- Other legal provision to protect your interests.
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