As a general rule, a lender does not have the inherent right to require early repayment of a loan. Therefore, the facility agreement must indicate circumstances or events that, if they occurred, would give this right to a lender. These circumstances or events are usually referred to as default events and vary for individual transactions and must be adapted and negotiated accordingly. They are usually heavily negotiated. The main reasons for retaining the terms in a document are to avoid a subsequent disagreement and to allow the lender to appeal if the loan is not repaid. A typical credit agreement defines the terms under which a lender will provide financing to the borrower and the parties should consider whether they should include the following conditions: Unsecured, this precisely means that there is no guarantee against the credit if the borrower breaks down. You can include a surety, which is a good way to protect the lender, but if the borrower won`t repay you, you may need to take legal action to get your loan back. The purpose of the loan does not affect the terms of the contract. You could lend money to a friend for short-term expenses like wedding expenses or for a long-term business. We review and design credit agreements for individuals or businesses that lend or lend to their family or friends. We can offer protection around credit agreements for unsecured loans or secured loans and the associated fees, which are taken as collateral, based on years of experience.
Typically, a lender agrees to grant a loan to a borrower if it comes with sufficient collateral for the loan. When collateral is provided, the loan is called a secured loan and the loan can be secured, for example, against a borrower`s property (in the form of a legal charge) or against the borrower`s businesses and assets (in the form of a bond), which then becomes a secured debt to the lender. For all other loans, 50% or more of the shareholders must approve the transaction by a written decision or a decision at a general meeting. For more information, see our «Loans to Directors» fact sheet from the Company Secretary. The fact sheet also indicates who is a «connected person». Outside of the Consumer Credit Act of 1974, this agreement is not suitable for companies that lend or lend to consumers.