A business loan agreement is essentially a legal written contract between a lender and a debtor which are to be legally enforced in court should either party fail to meet his/her end of the deal. The borrower agrees that in the event the cash being lent is not repaid within a specified time frame, a penalty will be charged by the lender, usually in the form of interest. In exchange, the lender expects the borrower to repay the loan on time, which would result in an interest rate which is lower than the market interest rate. The agreement also outlines the obligations of both parties, such as the payment dates for the loan and the payment modes for the principal and interest accumulated during the term of the loan.
In order for you to prepare a loan agreement, you must first collect and compile all the necessary information that pertains to your business venture. Among these important documents are the latest finance reports, operating expenditure details, cash flow forecasts, reserve funds, current assets and liabilities, and your business plan. After gathering all this information, it is best to create a single document for everything, such as the borrower's agreement, promissory note, master promissory note, and any other relevant forms. You may opt to use a legal writing software for this purpose. With the help of such software, you can format your documents easily, and it also allows you to customize it according to your specific preferences.
A borrower needs to prepare his/her personal loan agreement. It is important to keep in mind that a legal document is a legally binding contract, so it is important that you accurately spell out all terms and conditions in your agreement. If you are using a legal writing software, you can easily do so. Once you have created your personal loan agreement, you can now proceed to the next step – the lender's application. If you have already created your promissory note and master promissory note, you can skip this step.
After creating these documents, the next thing you need to do is to export them into a Word Document or PDF format, from which you will be able to export them into a Word file. You may choose between a traditional format or “ePub” format, which is commonly used by publishers. If you are using an online lender, you need to give the lender access to your personal loan agreement template so that they can use it for their lending process. In most cases, if you provide the lender with a physical copy of your template, you can expect a faster processing time.
After creating your loan agreement template, you should then export it to a Word document. If you are using a third-party application or website, here you need to fill in the borrower's personal data, business details, business plan, and terms and conditions. Remember that the borrower must sign the bottom of every page or section, including the section on how the money will be paid back. After doing so, you . . . . . . should then give the lender permission to use the template on the borrower's behalf. In most cases, the lender will provide a reference, which will allow you to access the borrower's credit records. The lender may also require you to upload a current pay stub or bank statement in order to verify the details provided.
The last step in the export process is to finalize the business loan agreement and send it back to the borrower. You should attach a copy of the completed document to your application, which you should keep for your records. The lender should then review the application, confirm the terms agreed upon, and then process your business loan. This process can usually take two weeks or less to complete.