Companies may prefer to borrow from their own shareholders if funds are available, especially if they are unable to obtain funding from other sources or if the loan is less expensive and more convenient than external third-party financing. Shareholders have the same ability to lend money to businesses as any other commercial entity. However, there may be concerns about the taking of security and potential conflicts of interest that should be considered before signing the loan agreement.
10+ Shareholders Loan Agreement Samples
When a corporation borrows money from or owes money to a shareholder, a Shareholder Loan Agreement, also known as a stockholder loan agreement, is an enforceable agreement between the shareholder and the corporation that details the terms of the loan (such as the repayment schedule and interest rates).
The Shareholder Loan Agreement serves as proof of a corporation’s debt to its shareholders. If a shareholder is an employee who is owed wages by the corporation, for example, the parties could use a shareholder loan agreement to detail the amounts owed.
1. Shareholders Loan Agreement Template
2. Shareholders Asset Loan Agreement
3. Consultation Shareholders Loan Agreement
4. Company Shareholders Loan Agreement
5. Sample Shareholders Loan Agreement
6. Shareholders Development Loan Agreement
7. Shareholders Property Loan Agreement
8. Shareholders Loan Shares Agreement
9. Shareholders Personal Loan Agreement
10. Shareholders Loan Facility Agreement
11. Voluntary Shareholders Loan Agreement
Writing a Shareholder Loan Agreement
A Shareholder Loan Agreement should include the following items, similar to a standard Loan Agreement:
- A schedule of payments (the manner in which the debt is repaid, e.g. a lump sum on a specific date or schedule regular payments over a period of time)
- The amount of the loan (including details about interest, if applicable)
- Information about the shareholders (name and address)
- Information about the company (name and address)
- Complementary (if applicable)
- Default information (e.g. increased interest rate if the corporation fails to repay on time)
- Details on signing (date and witness signatures, if applicable)
What Can a Company Use as Collateral?
If the company defaults on the loan or fails to make payments, you are protected by collateral. When a large sum of money is borrowed or there is a high risk of the company defaulting, collateral is frequently used.
The following items are frequently used as loan collateral:
- Inventory for a business (any materials or stock used by and for the business)
- The tools (any special equipment or machinery used in the running of the business)
- Accounts payable is a term that refers to the amount of money owed to you (the value of any services that the corporation gets after billing clients)
You’ll have to go to court to hold any corporate assets if you don’t secure collateral as part of the Loan Agreement. It’s also a good idea to choose collateral that, when liquidated, will cover the outstanding debt in the event of an unforeseen event, such as the company going bankrupt.
Why do I need a shareholder loan agreement?
A written Loan Agreement is a good way to keep track of a loan and to spell out each party’s responsibilities, as well as any other terms or conditions.
What are the other related documents?
- A contract in which a corporate guarantor assumes responsibility for another individual or corporation’s debt if they default on a debt to a third party.
- An indemnity agreement is a contract that protects one party from any unforeseen liabilities, losses, claims, or damages that may arise as a result of their participation in a specific activity.
- Individuals or groups of individuals use a non-binding letter of intent to detail an understanding of a future agreement.
- A promissory note is an enforceable agreement between a borrower and a lender to repay money borrowed.
- A Share Purchase Agreement is a contract that is used when an individual or a corporation wants to buy shares from another corporation’s shareholders.
- When a corporation wants to buy back shares from a shareholder, it uses a Share Repurchase Agreement.
- A shareholder agreement is a contract between a shareholder and a corporation that spells out the shareholder’s rights and responsibilities, as well as the value of the company’s stock.
What is a shareholder?
A shareholder (also known as a stockholder) is a person or organization who invests in a company and thus legally owns a portion of it.
If you want to see more samples and formats, check out some shareholder loan agreement samples and templates provided in the article for your reference.
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