Companies rely on money to operate their businesses. Whether you own a small business or run a huge company, a good cash flow is important. This is where a loan can be useful. Writing a Legal Contract for a loan is a necessary step to protect the borrower as well as the lender.
A loan refers to the act of borrowing money whether it is from a bank or a private company that offers loan services. A Vehicle Loan, for example, is useful when buying a vehicle. If you are looking for loan contracts, the samples and templates available on this page will be useful should you need a contract.
Personal Loan Contract Template
Loan Payment Contract
What Is a Loan Facility?
A loan facility, as defined by Investopedia, “is a formal financial assistance program offered by a lending institution to help a company that requires operating capital.” Basically, a loan facility is also a credit line. This is useful in businesses wherein the revenue is low. For example, if a business or company is earning less, this can affect the overall operation of the business. To avoid having to close the business during that particular season, or laying off employees, a company can borrow money from a loan facility to help the business. A loan is paid every month until the debt is paid by the business.
What Should a Loan Contract Contain?
After a company is granted a loan, getting a loan contract is one of the essential steps to protect both the lender and the borrower. It is important to understand what a basic loan contract should contain. A Service Contract is also available should you need it.
- A Loan Contract contains the names of both the lending institution and the borrower.
- It should contain the full amount of the loan.
- A contract should also specify the interest rate for that particular loan.
- A list of the specific dates a payment is due as well as the penalties for late payments.
Loan Repayment Contract
Legal Loan Contract
Vehicle Loan Contract
Importance of a Loan Contract
A Loan Contract is an essential document needed when acquiring a loan from different loan facilities. A loan contract’s main purpose is to protect both the lender of the money as well as the borrower. This will indicate the responsibilities of both parties, especially for the borrower to pay the loan at the agreed date. It is important for every borrower to understand the importance of a loan contract. A loan contract is a legal document, which means it is enforceable by law. A Payment Agreement Contract is useful to guarantee payment for a loan.
Types of Loan Facilities
- Overdraft Services loan money to a business with an interest and certain fees. This is useful when a business runs out of cash.
- Business Lines of Credit can be useful for corporations. This allows them access to cash whenever needed and usually has a high credit limit.
- Term Loans are typically used by big companies and businesses that need to finance an investment.
- Letters of Credit are used by most companies in the trade industry. A letter of credit is used to guarantee payment of a particular loan.
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