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Loan Agreement template

A loan agreement sets out the terms on which a lender advances money to a borrower, including the amount, interest, repayment schedule, security, and the rights of each party if something goes wrong.

Replace everything in [BRACKETS], export to PDF, then send it for signature.

1. Parties

This Loan Agreement (the "Agreement") is made on [DATE] between [LENDER NAME], located at [LENDER ADDRESS] (the "Lender"), and [BORROWER NAME], located at [BORROWER ADDRESS] (the "Borrower").

2. Loan Amount and Disbursement

The Lender agrees to lend the Borrower [LOAN AMOUNT AND CURRENCY] (the "Loan"). The Loan will be disbursed by [PAYMENT METHOD] to [BORROWER ACCOUNT DETAILS] on [DISBURSEMENT DATE] [OPTIONAL: in the following tranches: TRANCHE DETAILS], subject to the conditions in Section 3.

3. Purpose and Conditions

The Borrower shall use the Loan only for [PURPOSE OF LOAN]. The Lender's obligation to disburse is conditional on: [CONDITIONS, e.g. signed security agreement, proof of insurance, board approval, or "none"].

4. Interest

The Loan bears interest at [INTEREST RATE]% per year, calculated on a [simple / compound] basis from the date of disbursement until repaid in full. Interest shall not exceed the maximum rate permitted by applicable law. [ALTERNATIVE: The Loan is interest-free.]

5. Repayment

The Borrower shall repay the Loan and interest [in NUMBER FREQUENCY installments of INSTALLMENT AMOUNT starting on FIRST PAYMENT DATE / in full on MATURITY DATE]. A repayment schedule is attached as Schedule A. The Borrower may prepay all or part of the Loan at any time [without penalty / with a prepayment fee of FEE].

6. Security and Guarantee

[CHOOSE ONE: The Loan is unsecured. / The Loan is secured by DESCRIPTION OF COLLATERAL, and the Borrower shall sign any documents reasonably required to perfect the Lender's security interest.] [OPTIONAL: Repayment is guaranteed by GUARANTOR NAME under a separate guarantee.]

7. Borrower's Representations and Covenants

The Borrower represents that it has full authority to enter into this Agreement and that doing so does not breach any other agreement. Until the Loan is repaid, the Borrower shall: (a) use the Loan only for the stated purpose; (b) notify the Lender promptly of any event that could materially affect its ability to repay; and (c) [OTHER COVENANTS, e.g. provide annual financial statements, maintain insurance on collateral].

8. Late Payment and Default

A late fee of [LATE FEE] applies to any payment more than [GRACE PERIOD] days overdue, to the extent permitted by law. An Event of Default occurs if the Borrower fails to pay any amount within [DAYS] days after it is due, breaches any other term and fails to cure it within [CURE PERIOD] days of notice, provides materially false information, or becomes insolvent. On an Event of Default, the Lender may declare all outstanding amounts immediately due and enforce any security, and the Borrower shall pay reasonable enforcement costs.

9. Notices

Notices under this Agreement must be in writing and sent to the addresses above or to [NOTICE EMAIL ADDRESSES]. Notices sent by email are effective on the day sent if sent during business hours.

10. Governing Law and General Terms

This Agreement is governed by the laws of [GOVERNING LAW JURISDICTION], and the parties submit to the courts of [VENUE]. This Agreement is the entire agreement between the parties on its subject, may only be amended in writing signed by both parties, and may not be assigned by the Borrower without the Lender's written consent. If any provision is unenforceable, the rest remains in effect.

11. Signatures

The Parties agree that this Agreement may be signed electronically and in counterparts, and that electronic signatures have the same effect as handwritten signatures. LENDER: [LENDER NAME] Signature: ____________________ Name: [SIGNATORY NAME] Title: [SIGNATORY TITLE, if a company] Date: [DATE] BORROWER: [BORROWER NAME] Signature: ____________________ Name: [SIGNATORY NAME] Title: [SIGNATORY TITLE, if a company] Date: [DATE]

When to use this template

  • When lending a significant amount to an individual or a business
  • When a shareholder or founder lends money to their company
  • When the loan includes collateral, conditions, or ongoing obligations for the borrower
  • When you want both parties' rights and duties spelled out in more detail than a promissory note

How to fill it in and get it signed

  1. Enter the lender's and borrower's legal names and addresses and the agreement date.
  2. Fill in the loan amount, disbursement details, purpose, and any conditions before funds are released.
  3. Set the interest rate, repayment schedule, and prepayment terms, and attach the schedule as Schedule A.
  4. Describe any collateral or guarantee, the borrower's covenants, and the default and cure periods.
  5. Choose the governing law and venue, then upload the agreement to eSignSimple and send it to both parties for e-signature.

This template is general information, not legal advice. Laws differ by country and state; have a lawyer review contracts with high stakes.

Frequently asked questions

What should a loan agreement include?

The parties, loan amount, interest rate, repayment schedule, any collateral, what counts as default, the lender's remedies, and the governing law. Business loans often add covenants and conditions.

Is a loan agreement between friends legally binding?

Generally yes, if both parties sign and the terms are clear and lawful. Putting a personal loan in writing helps avoid misunderstandings about amounts and deadlines.

Is there a maximum interest rate I can charge?

Many jurisdictions have usury laws that cap interest rates, especially for consumer loans. Check the rules that apply to your loan before setting a rate.

Can I sign a loan agreement electronically?

Private loan agreements are commonly signed electronically in many countries. eSignSimple captures timestamps, IP addresses, and a document hash in an audit trail for each signed document.