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Unsecured loan agreement: person to person; private or business

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This is a simple agreement where the lender does not require security, perhaps because the borrower is certain to repay or perhaps because risk is priced into a higher interest rate.

Either or both parties could be a person or a company, making this agreement suitable for lending:

  • person to person - for example, to family members and friends
  • by a director or shareholder to or from his own company
  • by a partner into a partnership

The money could be for any purpose such as to consolidate other debts, or for small, short-term expenses.

The agreement includes options for:

  • alternative repayment provisions
  • lender action in case of default

Suitable for use in: England & Wales and Scotland

£18.00 inc VAT
(£15.00 ex VAT)
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Friends and family loan agreement

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This agreement aims to bridge the gap between not using a document at all, and using a longer, more comprehensive one.

It makes clear to the borrower that the arrangement is "for real".

Despite its simplicity, the document is legally binding. You can take action if the borrower doesn't pay on time, or uses the money for a reason not agreed.

It is suitable for situations such as lending:

  • to a friend to buy a car or other high priced item
  • to a child for a house deposit
  • to a child to fund a wedding

Suitable for use in: England & Wales and Scotland

£9.60 inc VAT
(£8.00 ex VAT)
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Loan agreement: private borrower; secured on physical assets

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For a loan secured against tangible assets of any size and type, such as a car, stock, equipment or fixed plant.

Suitable for lending by an individual or a company to a borrower who is a individual or a partnership, for purposes such as:

  • to a nephew to purchase stock for a new business
  • to a friend who needs to consolidate personal or business debts
  • to a son or daughter to fund the purchase of a high value item

The document includes optional provisions for:

  • assets to be left in the possession of the borrower
  • sale of the assets if the borrower defaults
  • an additional guarantee by a third party

Suitable for use in: England & Wales and Scotland

£22.80 inc VAT
(£19.00 ex VAT)
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Loan agreement: person to person; secured by guarantee

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This agreement brings in a third party guarantor as security for the loan.

The borrower and the lender should both be individuals.

Use for loans to family and friends as well as for arms length business deals. Examples are:

  • to start or to finance a business
  • to repay or to consolidate personal or business debts
  • to purchase of a high value item

The document includes optional provisions for:

  • alternative options for repayment
  • actions the lender can take in case of non-repayment or default

Suitable for use in: England & Wales and Scotland

£22.80 inc VAT
(£19.00 ex VAT)
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Loan agreement: individual borrower; secured on financial assets

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For a loan secured against assets such as company shares, the right to receive another debt, or intellectual property rights.

Suitable for lending by an individual or a company to an individual or a partnership, for purposes such as:

  • a personal loan to a family member or a friend
  • company loan to a director or an employee
  • a partner lending to his partnership

The document includes optional provisions for:

  • an additional guarantee by a third party
  • alternative repayment
  • lender action in case of default

Suitable for use in: England & Wales and Scotland

£22.80 inc VAT
(£19.00 ex VAT)
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Loan agreement: person to person; property purchase

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This agreement covers the specific situation of a loan of money to family or friends for the purpose of helping to buy a house or flat, or for a renovation project.

Even when you trust the person to whom you lend, you should record the agreement in writing.

By using this document, you should avoid confusion about whether the money was a gift or a loan, when the money should be repaid and at what rate of interest. This is particularly important for lending to more than one person where there is a risk the relationship between the borrowers may not last, such as a son or a daughter and his or her partner, or where the property will be jointly owned with someone other than the borrower.

Options in the template include:

  • additional guarantee by a third party
  • alternative repayment provisions
  • choice of actions that can be taken in case of default

Suitable for use in: England & Wales and Scotland

£22.80 inc VAT
(£19.00 ex VAT)
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Loan agreement: company; secured by guarantee

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This is an agreement between a lender, who may be an individual or a corporate body, and a borrower, who is a company or a trust. Security is provided by a personal guarantee of a third party, probably one or more directors.

Example uses include lending:

  • by a family member to her nephew’s business
  • by a business angel who has also taken shares
  • an arm’s length “investment”

We include strong optional provisions to protect the lender:

  • alternative repayment provisions
  • lender action if borrower defaults
  • promise by borrower to make no change to capital structure
  • provision for early repayment
  • contingency plans if something goes wrong
  • an option on possible assignment of the rights and obligations set up under the agreement
  • warranties by the borrower as to aspects of its financial state
  • signatory accepts personal liability for his proper authorisation

Suitable for use in: England & Wales and Scotland

£28.80 inc VAT
(£24.00 ex VAT)
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Loan agreement: company borrower; secured on physical assets; guarantor option

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This agreement is between a lender, who may be an individual or a corporate body, and a borrower, who is a company. The loan is secured on specific physical assets. This is not a fixed and floating charge.

Security could be any physical assets, lodged or described, with options for:

  • Security by either taking physical possession, or by leaving the assets where they are and describing them sufficiently in the document.
  • Occasional use of the assets by the borrower.
  • Sale of the secured assets by the lender in case of default.

Other optional provisions include:

  • warranties by the debtor as to the financial state of the company
  • the signatory accepts personal liability for his proper authorisation
  • an additional personal guarantee and guarantor’s covenants
  • a promise by the borrower not to change the capital structure
  • early repayment
  • contingency plans if something goes wrong
  • assignment of the rights and obligations set up under the agreement

Suitable for use in: England & Wales and Scotland

£34.80 inc VAT
(£29.00 ex VAT)
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Loan agreement: company; secured on financial instruments

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An agreement between a lender, who may be an individual or a corporate body, and a borrower, who is a company. The loan may be secured on shares, intellectual property rights or other intangible property. Securities may be in hard or soft copy, or both.

This agreement strongly protects the lender:

  • If the value of the security falls below a specified level, the lender can call on the borrower to top it up.
  • In case of possible default, for any reason and at any time the lender may call upon the borrower to transfer title to him of any or all of the securities. If there is no accepted system of registration of ownership, that is the only way the lender would be protected if the borrower went down.

Optional provisions include:

  • warranties by the borrower as to the financial state of the company
  • the signatory accepts personal liability for his proper authorisation
  • an additional personal guarantee and guarantor’s covenants
  • a promise by the borrower to make no change to capital structure
  • early repayment
  • contingency plans if something goes wrong
  • assignment of the rights and obligations set up under the agreement

Suitable for use in: England & Wales and Scotland

£34.80 inc VAT
(£29.00 ex VAT)

Introduction

All our loan agreements are drawn outside the Consumer Credit Act 1974. Whilst that makes them unsuitable for companies in the business of lending or providing credit, for private lending they are very flexible, allowing you to make, more or less, the deal you choose.

These agreements can be used:

  • For short- or long-term lending
  • Regardless of where the two parties are: UK or abroad
  • For loaning amounts of any size, and with repayment terms of any complexity

The terms in these documents

Each document is drawn for circumstances that differ slightly from the others, so the terms in each vary. But be assured - all the documents include the terms appropriate for their purpose.

Note that we provide very extensive guidance notes with every document that explain each paragraph in the document in detail.

Guarantors

Almost all the templates provide for guarantors – even if the loan is secured against other assets as well.

In most cases, a guarantee is much more effective than other types of security because non-repayment risks a relationship and the reputation of the guarantor as well as of the borrower.

Additionally, in most situations, the lender only needs to satisfy himself that the guarantor has sufficient assets overall, and therefore doesn’t have to perform detailed valuations of individual items offered as security.

We strongly advise that you insist on a guarantor when you lend to a company. The guarantor should be one or more directors of the company. Remember that a guarantee is far more effective if it includes the spouse or life partner of a director.

Loan term

The time period during which the sum is lent can be any you choose. There are no “legal” consequences in the loan term being long or short: no notices, no special registrations.

Interest rate

There is no limit in law on the interest that the lender charges. A lender can charge what rate he chooses. The rate can be variable from one time period to another. It can be reduced for prompt payment.

We have provided for a greater rate of interest if the debtor falls behind with repayments.

The lender is given strong protection

All templates provide strong protection for the lender. This applies more to those documents where the reason for lending is a business one rather than to help family or friends. We take the simple view that since the money is not a gift, the lender expects to get it back.

If you are lending to a family member it is unlikely that you will want to bankrupt him for a failed repayment. However, in a business deal remember that if the business goes down, a dispute as to entitlement is more likely to be against a liquidator or receiver than against the shareholder-director who took on the debt. That is why we make the term of these agreements so strong.

Assets as security

Physical goods can provide sound security because the lender should be able to acquire them and sell them easily should the borrower default. Of course, goods that can be removed easily provide better security than those that require specialist equipment to move them.

In these agreements, the sum lent can be secured either by the lender taking physical possession of the assets at the outset, or by leaving them where they are and describing them in sufficient detail in the agreement so that there can be no dispute as to what is charged. The agreement then provides the evidence that the item is secured.

Security is explained fully in the guidance notes to each agreement.

A loan to a company requires registration of the charge

If the borrower is a company then registration of the charge at Companies House will be required.

Bankruptcy and liquidation law is very complicated. There are rules as to the ranking priority order of different creditors. A loan which where the document is registered at Companies House takes priority over debts which are not registered. Strangely, it is the company that has the legal obligation to register every charge or debt, even though registration protects the creditor.

When the debt is repaid, whether fully or in part, the company has no obligation to inform Company House. However, it is in the company's own interests that potential investors and lenders are aware that it has satisfied all or part of the debt.

Although we provide explicitly that the company shall register the charge, it is best if the lender makes sure this is done. The debt will then be valid against a liquidator or administrator, should the company become insolvent.

Why choose Net Lawman

Immediate delivery of the document template by e-mail after checkout
DocX file format compatible with all popular PC & Mac word processing software. We can convert into other formats for you
Use of plain English makes our documents easy to edit and understand
Detailed guidance notes explain the purpose of each paragraph and how to edit
Review service available - a Net Lawman lawyer can check your edited document
Full money back guarantee if the document isn't right for you
 
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