Template: Loan Agreement: company; secured by guarantee

What Net Lawman says about this template:

"This agreement is for use when the borrower is a company or other corporate body, or a trust.

It is drawn so that lender is also a corporate body, but the lender may as easily be an individual or a trust.

The lender has the security of the personal guarantee of one or more directors. In many cases, a guarantor 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. Another advantage is that, 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.

The agreement may be for a loan to a family member’s business; by a business angel in addition to equity; or simply an arm’s length investment.

Because the borrower is a company, we have included a number of warranties. These take effect as promises by the borrower as to aspects of its financial state. We have also provided that the signatory accepts personal liability for his proper authorisation. To some extent that person is bound in the same way as the company. All the better if he is a guarantor."

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