What is a Commercial Loan Agreement?

Commercial Loan Agreement is a loan agreement on commercial terms.To borrow money under a Commercial Loan Agreement, the borrower has to pay a stipulated amount of interest to the lender and repay the loan on specified dates.


Commercial Loan Agreement Template

How to create a Commercial Loan Agreement

1
Create a Zegal Account
2
Make an agreement using Zegal templates
3
Get help from a lawyer anytime
Block Image

Easy to Use Legal Templates

Quickly and easily create any legal agreement for you or your team.

Affordable Plans

Straightforward pricing plans and bespoke packages built to simplify all your legal demands.

Block Image
Block Image

Vast Document Library

Zegal’s comprehensive collection of agreements means you always have what you need at your fingertips.

What is a Commercial Loan Agreement?

Commercial Loan Agreement

Commercial Loan Agreement is a loan agreement on commercial terms.

To borrow money under a Commercial Loan Agreement, the borrower has to pay a stipulated amount of interest to the lender and repay the loan on specified dates.

A loan created under a Commercial Loan Agreement can be secured or unsecured, but in the case of a secured document, additional security documents are required.

Purpose of a Loan Agreement

The purpose of a loan agreement is to define the responsibilities of the parties involved. It also sets the terms of the agreement formally. These contracts should be compliant with local regulations to ensure that both the lender and borrower are protected. A signed loan agreement or contract is proof of the commitment between the lender and borrower. 

 

Secured Commercial Loans

To get a secured business loan, the borrower must have ownership of some collateral to be used in the event that repayment is not done. For example, these collaterals could be, a building or a piece of land. Also, the value the collateral holds is held against the amount of the loan and the specifications of the loan agreement with the lender. 

In the case where a borrower fails to repay the loan, the lender is entitled to take ownership of the collateral outright. Secured commercial loans are easier to get because of the collateral provided as it helps the lender mitigate risk. The interest rate on these loans will also be lower.

Unsecured Commercial Loans

Collateral is not required for this type of commercial loan. It is more difficult to get because there is no security for the lender and involves quite a bit of risk. Hence if the borrower defaults, there is little way for the lender to recover the amount given.

These loans require the borrower to have excellent financial stability and a proven record of paying off debts well. There are often a lot more requirements involved in obtaining an unsecured loan. Additionally, interest rates for an unsecured loan are quite high as the lender is taking on substantial risk.

You Might Also Like

Along with this document, make sure you see these other templates in our library:

The Zegal Template Library

Zegal's template library is a list of essential and premium business templates for your everyday legal needs.

Save money and time without sacrificing quality or missing vital legal requirements. Whether you're a startup or a larger enterprise, Zegal lets anyone create a legal agreement.

Let us take care of the legals so you can focus on running your business.

If you need more help, our "Talk to a Lawyer" feature gives you access to a qualified lawyer to get all the expert advice you need.

Try it for free today!

Related Documents

If you're creating a Commercial Loan Agreement, you may also be interested in the following documents: