Loan agreement

About this secured loan agreement

This secured loan agreement is suitable for any company or human individual to lend to one or more people. (See below for documents for loans to companies). You could use it in a business or private loan situation. If you are the borrower, you have the opportunity to edit any point you would prefer not to include.

The purpose of the loan is not important. (But of course it is important that the purpose is specified in the loan agreement.)

This agreement allows you to use shares or other financial instruments as collateral for a secured loan. The security could be any intellectual property. In addition, we have provided for a third party guarantor. That is optional of course and may be deleted easily.

There is no limit in law on the interest that the lender charges. We have provided for a greater rate of interest if the borrower falls behind with repayments. (That is done very carefully so as to avoid it being treated as a “penalty” - not allowed in New Zealand law.)

The agreement could be whatever you want to put in it, but we have provided a sound and comprehensive set of terms, many with options. It is supported by drafting notes so that you will know whether you can safely delete some provision. It is most unlikely that you will want to add new provisions, but if you do, it is easy. Our layout and use of plain English also make it very easy to edit by deletion.

When to use this secured loan agreement

• The lender and the borrower may be a business or an individual
• Suitable where a company lends to a director or employee
• Suitable for personal loans to family and friends
• Either or both parties may be in New Zealand or abroad
• Flexible for loans of any size and repayment terms of any complexity

The law in this secured loan agreement

There is little statutory regulation relating to an agreement of this nature, so you can make, more or less, the deal you choose.

Drawn outside the Credit Contract and Consumer Finance Act 2003, this agreement is not suitable for companies in the business of lending or providing credit to consumers.

Alternatives to this secured loan agreement

Net Lawman offers three documents in this set. Each is available in two versions: one for a company borrower and the other set for a human individual or partnership borrower. All can be for any purpose.

The documents are:

• Unsecured loan agreement: person to person; private or business
• Loan agreement: individual borrower; secured on financial assets (this agreement)
• Loan agreement: private borrower; secured on physical assets
• Loan agreement: company; secured by guarantee
• Loan agreement: person to person; secured by guarantee
• Loan agreement: company; secured on financial instruments
• Loan agreement: company borrower; secured on physical assets; guarantor option

We do not provide a document suitable for charging real property because such work is restricted by law to solicitors and licensed conveyancers.

Contents of this secured loan agreement

The contents of the agreement include:

• Structure of the loan;
• Alternative draw down arrangements;
• Provisions of information to lender to allow valuation;
• Repayment and interest payment arrangements;
• Method of payment;
• Provision for default situations;
• Borrower's warranties;
• A round up of legal matters which many draftsmen use to create another ten paragraphs. Here they are in one place and in plain English.