Create your own

Loan Agreement Template

with a bulletproof template & simple e-signing

Customize this

Loan Agreement Template

in minutes with

Bonsai's free contract generator

Oops! Something went wrong while submitting the form.
Loan Agreement TemplateLoan Agreement TemplateLoan Agreement Template

Bonsai has helped create 151,954 contracts and counting

"I did a lot of research before switching to Bonsai from another service. The ability to send and sign contracts was a game changer for me. No one else offers such a seamless process from proposal to contract to invoice. It has saved me a lot of time and lets me focus on creative work."
Kevin Tudball
Create a contract
Save time icon

Save time

with simple contracts & invoices

Protect yourself

from late payments & scope creep

Get peace of mind

with a standard & transparent process
GET STARTED NOW

Bonsai handles the back office.
You focus on the work you love.

How it works

Choose a contract

from a library of vetted, plain English templates

Select your terms

and fully customize them based on your needs

Sign electronically

and store securely

Create beautiful invoices

and accept payments worldwide

Do the work you love

Bonsai handles the back office

What is a loan agreement?

No matter if you're a company or an individual, the business of lending money can be a tricky one. Both lender and borrower want to be protected and have all of their rights safe and secure. This is where a loan agreement comes into place, leaving no room for interpretation.

These documents help to give advice for all the relevant information agreed upon from both parties while providing written security if loan terms are broken.

A loan agreement is a physical document between two correspondents, the lender and the borrower. A contract like this can be enforced in court if either party don't follow the loan terms set when signing.

The borrower will agree to repay the lender at an agreed future date, with a possible interest rate. Following this, the lender cannot suddenly decide they want their money repaid early or decide not to give the borrower any funds.

A basic loan agreement will include these simple details:

  • Borrower - The party who is borrowing money and agrees to repay at a later date.
  • Lender - The party who is giving money and will get it back at a later date.
  • Principal Amount - the agreed amount of cash being transferred.
  • Interest - An amount of additional money paid to the Lender, usually a percentage of the borrowed sum of money.
  • Maturity Date: The agreed date the borrower should repay the lender along with any agreed interest.

If you're still struggling with how you think a loan agreement should be presented, our agreement templates are a great place you can create a perfect, custom template!

What does a loan agreement template need to include?

Here are the vital sections you need to include in your loan agreement template. You can create your own template using the online contract maker. We have everything you need to create the perfect lending agreement.

Details of the borrower and the lender

The details of both parties need to be displayed clearly on any lending agreement. This will show their names in full and their full home address.

Principal and interest

The principal balance is the lump-sum of money being borrowed. The lender can set an interest rate meaning the borrower will need to pay an extra fee to repay the loan in full. This amount is usually a percentage of the original loan.

Repayment schedule

The repayment schedule will show whether the loan payment will be paid in full on a specific date or in instalments on a certain date. A payment plan could be annually, semi-annually, quarterly, or monthly depending on what is agreed.

Governing law

The governing law is usually the law jurisdiction where the agreement will take place. It is common for this jurisdiction to be the lenders' place of residence.

Late payment charges

If there is a late fee that both parties agree upon, the borrower will have to pay a certain amount if the lending agreement is broken. This is usually a percentage of the initial loan. Not every lending agreement has to include a late payment charge but is usually there to provide extra security to the lender.

Signatures of all parties involved

Once both parties agree, they'll need to sign the document showing that they have read and agreed on the terms and conditions that both lender and borrower have set.

Why are loan agreements important?

Having a loan agreement is a crucial area when borrowing any sum of money. Without these documents, parties are unprotected if anyone breaks the loan contract terms. Here are some of the key reasons why you need a loan agreement:

  • All Vagueness is lost - A loan agreement removes the possibility of any miscommunication. Everything is written out from the loan details, the terms of repayment, any fees, and interest rates. A loan agreements purpose is to help everyone know what is expected from them.
  • Changes are prevented - Without an agreement regarding any loans, unexpected changes from both parties can occur. Lenders suddenly raising the agreed rate or asking for repayment at an earlier date. On the other side, lenders are protected from any late payments made by the borrower.
  • Negotiate the best deal - Fees such as application, maintenance, or prepayment penalties can all be removed with this kind of agreement, helping to save money overall.
  • Provides proof. A loan agreement is a form of protection. If you have proof that you have received this money through a loan payment and not a gift, the IRS cannot come at you with any tax-related payment.

When should you use a loan agreement?

A regular document type, a loan agreement, should be used when a substantial amount of money is loaned by a lender to a borrower. They are particularly important if the two parties are not closely linked, keeping a more formal setting to the agreement.

Use this template
GET STARTED NOW

The simplest way to create a legally sound contract. Check out an example below

Loan Agreement Template


This Contract is between Sample Client (the "Lender") and  John  Doe (the "Borrower").

1. PAYMENT.

1.1 Project. The Borrower will use the product of the Lender for a monthly fee.

1.2 Schedule. The Borrower will begin on March 9, 2021, and the contract is ongoing. This Contract can be ended by either Lender or Borrower at any time, pursuant to the terms of Section 6, Term and Termination.

1.3 Payment. The Borrower will pay the Lender a rate of $2,000.00 (USD) per month. Of this, the Borrower will pay the Lender $1,000.00 (USD) before it begins.

1.4 Expenses. The Lender will reimburse the Borrower's expenses. Expenses do not need to be pre-approved by the Lender.

1.5 Invoices. The Borrower will invoice the Lender monthly. The Borrower agrees to pay the amount owed within 15 days of receiving the invoice. Payment after that date will incur a late fee of 5.0% per month on the outstanding amount.

1.6 Support. The Contractor will not provide support for any deliverable once the Lender accepts it unless otherwise agreed in writing.

2. OWNERSHIP AND LICENSES.

2.1 Client Owns All Work Product. As part of this job, the Contractor is creating “work product” for the Client. To avoid confusion, work product is the finished product, as well as drafts, notes, materials, mockups, hardware, designs, inventions, patents, code, and anything else that the Contractor works on—that is, conceives, creates, designs, develops, invents, works on, or reduces to practice—as part of this project, whether before the date of this Contract or after. The Contractor hereby gives the Client this work product once the Client pays for it in full. This means the Contractor is giving the Client all of its rights, titles, and interests in and to the work product (including intellectual property rights), and the Client will be the sole owner of it. The Client can use the work product however it wants or it can decide not to use the work product at all. The Client, for example, can modify, destroy, or sell it, as it sees fit.

2.2 Contractor's Use Of Work Product. Once the Contractor gives the work product to the Client, the Contractor does not have any rights to it, except those that the Client explicitly gives the Contractor here. The Client gives permission to use the work product as part of portfolios and websites, in galleries, and in other media, so long as it is to showcase the work and not for any other purpose. The Client does not give permission to sell or otherwise use the work product to make money or for any other commercial use. The Client is not allowed to take back this license, even after the Contract ends.

2.3 Contractor's Help Securing Ownership. In the future, the Client may need the Contractor's help to show that the Client owns the work product or to complete the transfer. The Contractor agrees to help with that. For example, the Contractor may have to sign a patent application. The Client will pay any required expenses for this. If the Client can’t find the Contractor, the Contractor agrees that the Client can act on the Contractor's behalf to accomplish the same thing. The following language gives the Client that right: if the Client can’t find the Contractor after spending reasonable effort trying to do so, the Contractor hereby irrevocably designates and appoints the Client as the Contractor's agent and attorney-in-fact, which appointment is coupled with an interest, to act for the Contractor and on the Contractor's behalf to execute, verify, and file the required documents and to take any other legal action to accomplish the purposes of paragraph 2.1 (Client Owns All Work Product).

2.4 Contractor's IP That Is Not Work Product. During the course of this project, the Contractor might use intellectual property that the Contractor owns or has licensed from a third party, but that does not qualify as “work product.” This is called “background IP.” Possible examples of background IP are pre-existing code, type fonts, properly-licensed stock photos, and web application tools. The Contractor is not giving the Client this background IP. But, as part of the Contract, the Contractor is giving the Client a right to use and license (with the right to sublicense) the background IP to develop, market, sell, and support the Client’s products and services. The Client may use this background IP worldwide and free of charge, but it cannot transfer its rights to the background IP (except as allowed in Section 11.1 (Assignment)). The Client cannot sell or license the background IP separately from its products or services. The Contractor cannot take back this grant, and this grant does not end when the Contract is over.

2.5 Contractor's Right To Use Client IP. The Contractor may need to use the Client’s intellectual property to do its job. For example, if the Client is hiring the Contractor to build a website, the Contractor may have to use the Client’s logo. The Client agrees to let the Contractor use the Client’s intellectual property and other intellectual property that the Client controls to the extent reasonably necessary to do the Contractor's job. Beyond that, the Client is not giving the Contractor any intellectual property rights, unless specifically stated otherwise in this Contract.

3. COMPETITIVE ENGAGEMENTS.

The Contractor won’t work for a competitor of the Client until this Contract ends. To avoid confusion, a competitor is any third party that develops, manufactures, promotes, sells, licenses, distributes, or provides products or services that are substantially similar to the Client’s products or services. A competitor is also a third party that plans to do any of those things. The one exception to this restriction is if the Contractor asks for permission beforehand and the Client agrees to it in writing. If the Contractor uses employees or subcontractors, the Contractor must make sure they follow the obligations in this paragraph, as well.

4. NON-SOLICITATION.

Until this Contract ends, the Contractor won’t: (a) encourage Client employees or service providers to stop working for the Client; (b) encourage Client customers or clients to stop doing business with the Client; or (c) hire anyone who worked for the Client over the 12-month period before the Contract ended. The one exception is if the Contractor puts out a general ad and someone who happened to work for the Client responds. In that case, the Contractor may hire that candidate. The Contractor promises that it won’t do anything in this paragraph on behalf of itself or a third party.

5. REPRESENTATIONS.

5.1 Overview. This section contains important promises between the parties.

5.2 Authority To Sign. Each party promises to the other party that it has the authority to enter into this Contract and to perform all of its obligations under this Contract.

5.3 Contractor Has Right To Give Client Work Product. The Contractor promises that it owns the work product, that the Contractor is able to give the work product to the Client, and that no other party will claim that it owns the work product. If the Contractor uses employees or subcontractors, the Contractor also promises that these employees and subcontractors have signed contracts with the Contractor giving the Contractor any rights that the employees or subcontractors have related to the Contractor's background IP and work product.

5.4 Contractor Will Comply With Laws. The Contractor promises that the manner it does this job, its work product, and any background IP it uses comply with applicable U.S. and foreign laws and regulations.

5.5 Work Product Does Not Infringe. The Contractor promises that its work product does not and will not infringe on someone else’s intellectual property rights, that the Contractor has the right to let the Client use the background IP, and that this Contract does not and will not violate any contract that the Contractor has entered into or will enter into with someone else.

5.6 Client Will Review Work. The Client promises to review the work product, to be reasonably available to the Contractor if the Contractor has questions regarding this project, and to provide timely feedback and decisions.

5.7 Client-Supplied Material Does Not Infringe. If the Client provides the Contractor with material to incorporate into the work product, the Client promises that this material does not infringe on someone else’s intellectual property rights.

6. TERM AND TERMINATION.

This Contract is ongoing, until ended by the Client or the Contractor. Either party may end this Contract for any reason by sending an email or letter to the other party, informing the recipient that the sender is ending the Contract and that the Contract will end in 7 days. The Contract officially ends once that time has passed. The party that is ending the Contract must provide notice by taking the steps explained in Section 11.4. The Contractor must immediately stop working as soon as it receives this notice, unless the notice says otherwise.  The Client will pay the Contractor for the work done up until when the Contract ends and will reimburse the Contractor for any agreed-upon, non-cancellable expenses. The following sections don’t end even after the Contract ends: 2 (Ownership and Licenses); 3 (Competitive Engagements); 4 (Non-Solicitation); 5 (Representations); 8 (Confidential Information); 9 (Limitation of Liability); 10 (Indemnity); and 11 (General).

7. INDEPENDENT CONTRACTOR.

The Client is hiring the Contractor as an independent contractor. The following statements accurately reflect their relationship:

  • The Contractor will use its own equipment, tools, and material to do the work.
  • The Client will not control how the job is performed on a day-to-day basis. Rather, the Contractor is responsible for determining when, where, and how it will carry out the work.
  • The Client will not provide the Contractor with any training.
  • The Client and the Contractor do not have a partnership or employer-employee relationship.
  • The Contractor cannot enter into contracts, make promises, or act on behalf of the Client.
  • The Contractor is not entitled to the Client’s benefits (e.g., group insurance, retirement benefits, retirement plans, vacation days).
  • The Contractor is responsible for its own taxes.
  • The Client will not withhold social security and Medicare taxes or make payments for disability insurance, unemployment insurance, or workers compensation for the Contractor or any of the Contractor's employees or subcontractors.


8. CONFIDENTIAL INFORMATION.

8.1 Overview.  This Contract imposes special restrictions on how the Client and the Contractor must handle confidential information. These obligations are explained in this section.

8.2 The Client’s Confidential Information.  While working for the Client, the Contractor may come across, or be given, Client information that is confidential. This is information like customer lists, business strategies, research & development notes, statistics about a website, and other information that is private. The Contractor promises to treat this information as if it is the Contractor's own confidential information. The Contractor may use this information to do its job under this Contract, but not for anything else. For example, if the Client lets the Contractor use a customer list to send out a newsletter, the Contractor cannot use those email addresses for any other purpose. The one exception to this is if the Client gives the Contractor written permission to use the information for another purpose, the Contractor may use the information for that purpose, as well. When this Contract ends, the Contractor must give back or destroy all confidential information, and confirm that it has done so. The Contractor promises that it will not share confidential information with a third party, unless the Client gives the Contractor written permission first. The Contractor must continue to follow these obligations, even after the Contract ends. The Contractor's responsibilities only stop if the Contractor can show any of the following: (i) that the information was already public when the Contractor came across it; (ii) the information became public after the Contractor came across it, but not because of anything the Contractor did or didn’t do; (iii) the Contractor already knew the information when the Contractor came across it and the Contractor didn’t have any obligation to keep it secret; (iv) a third party provided the Contractor with the information without requiring that the Contractor keep it a secret; or (v) the Contractor created the information on its own, without using anything belonging to the Client.

8.3 Third-Party Confidential Information.   It’s possible the Client and the Contractor each have access to confidential information that belongs to third parties. The Client and the Contractor each promise that it will not share with the other party confidential information that belongs to third parties, unless it is allowed to do so. If the Client or the Contractor is allowed to share confidential information with the other party and does so, the sharing party promises to tell the other party in writing of any special restrictions regarding that information.  

9. LIMITATION OF LIABILITY.

Neither party is liable for breach-of-contract damages that the breaching party could not reasonably have foreseen when it entered this Contract.

10. INDEMNITY.

10.1 Overview.  This section transfers certain risks between the parties if a third party sues or goes after the Client or the Contractor or both. For example, if the Client gets sued for something that the Contractor did, then the Contractor may promise to come to the Client’s defense or to reimburse the Client for any losses.

10.2 Client Indemnity.  In this Contract, the Contractor agrees to indemnify the Client (and its affiliates and their directors, officers, employees, and agents) from and against all liabilities, losses, damages, and expenses (including reasonable attorneys’ fees) related to a third-party claim or proceeding arising out of: (i) the work the Contractor has done under this Contract; (ii) a breach by the Contractor of its obligations under this Contract; or (iii) a breach by the Contractor of the promises it is making in Section 5 (Representations).

10.3 Contractor Indemnity.  In this Contract, the Client agrees to indemnify the Contractor (and its affiliates and their directors, officers, employees, and agents) from and against liabilities, losses, damages, and expenses (including reasonable attorneys’ fees) related to a third-party claim or proceeding arising out of a breach by the Client of its obligations under this Contract.

11. GENERAL.

11.1 Assignment.  This Contract applies only to the Client and the Contractor. The Contractor cannot assign its rights or delegate its obligations under this Contract to a third-party (other than by will or intestate), without first receiving the Client’s written permission. In contrast, the Client may assign its rights and delegate its obligations under this Contract without the Contractor's permission. This is necessary in case, for example, another Client buys out the Client or if the Client decides to sell the work product that results from this Contract.

11.2 Arbitration.  As the exclusive means of initiating adversarial proceedings to resolve any dispute arising under this Contract, a party may demand that the dispute be resolved by arbitration administered by the American Arbitration Association in accordance with its commercial arbitration rules.

11.3 Modification; Waiver.  To change anything in this Contract, the Client and the Contractor must agree to that change in writing and sign a document showing their contract. Neither party can waive its rights under this Contract or release the other party from its obligations under this Contract, unless the waiving party acknowledges it is doing so in writing and signs a document that says so.

11.4 Notices.

(a)  Over the course of this Contract, one party may need to send a notice to the other party. For the notice to be valid, it must be in writing and delivered in one of the following ways: personal delivery, email, or certified or registered mail (postage prepaid, return receipt requested). The notice must be delivered to the party’s address listed at the end of this Contract or to another address that the party has provided in writing as an appropriate address to receive notice.

(b)  The timing of when a notice is received can be very important. To avoid confusion, a valid notice is considered received as follows: (i) if delivered personally, it is considered received immediately; (ii) if delivered by email, it is considered received upon acknowledgement of receipt; (iii) if delivered by registered or certified mail (postage prepaid, return receipt requested), it is considered received upon receipt as indicated by the date on the signed receipt. If a party refuses to accept notice or if notice cannot be delivered because of a change in address for which no notice was given, then it is considered received when the notice is rejected or unable to be delivered. If the notice is received after 5:00pm on a business day at the location specified in the address for that party, or on a day that is not a business day, then the notice is considered received at 9:00am on the next business day.

11.5 Severability.  This section deals with what happens if a portion of the Contract is found to be unenforceable. If that’s the case, the unenforceable portion will be changed to the minimum extent necessary to make it enforceable, unless that change is not permitted by law, in which case the portion will be disregarded. If any portion of the Contract is changed or disregarded because it is unenforceable, the rest of the Contract is still enforceable.

11.6 Signatures.  The Client and the Contractor must sign this document using Bonsai’s e-signing system. These electronic signatures count as originals for all purposes.

11.7 Governing Law. The laws of the state of Illinois govern the rights and obligations of the Client and the Contractor under this Contract, without regard to conflict of law principles of that state.

11.8 Entire Contract.  This Contract represents the parties’ final and complete understanding of this job and the subject matter discussed in this Contract. This Contract supersedes all other contracts (both written and oral) between the parties.

Other

contract templates

Create your own

Loan Agreement Template

Securing your account...
Oops! Something went wrong while submitting the form.