Loan Agreement

Loaning money to a borrower always carries the inherent risk that the borrower can't or won't pay back the money. There is also a risk to the borrower that the lender reneges on the loan or refuses to make the funds available.

In either of those scenarios, a Loan Agreement provides the basis for legal action. The borrower may be forced by a court to repay the borrower according to the terms in the agreement. A court can also compel the lender to go through with the Loan Agreement if the borrower chooses to pursue it.

What Is a Loan Agreement?

A Loan Agreement is a legally-binding document that establishes the conditions of a loan between a borrower and a lender. Loan Agreements can be used for business loans, personal loans, and all other types of loans.

Once a Loan Agreement is signed, neither party can change their minds about the terms. The lender must honor the promise to provide money to the borrower, and the borrower must repay that money as stipulated in the Loan Agreement.

Other Names for Loan Agreement

Depending on your state, jurisdiction, or context, a Loan Agreement may also be known as:

• Promissory Note

• Term Loan

• I Owe You (IOU)

• Note Payable

By using the attorney-vetted forms on Swyft Forms, you'll ensure that you have the correct type and wording of the form you need for your jurisdiction.

Loan Agreement Terms

• Guarantor: A person who is legally responsible for the loan in case the borrower can't pay it back

• Secured Loan: A type of loan that requires the borrower to pledge an asset or assets as collateral

• Collateral: Any assets that the lender can take in exchange for the loan amount if the borrower fails to repay

• Variable Rate: An interest rate that can change during the course of the loan

• Origination Fee: A fee that a lender can charge the borrower to process the loan

• Default: When the borrower fails to repay the loan

Who Needs a Loan Agreement

Any individual or organization that needs to provide a legal framework for the terms of a loan can do so through the use of a Loan Agreement. Loan Agreements don't need to be any more complicated than the terms of a loan require.

When loaning money between friends and family, many people choose not to use a Loan Agreement. However, using a Loan Agreement can be a wise decision in any situation in which a borrower receives money from a lender.

Loan Agreements aren't necessarily a sign of distrust between the two parties involved in a loan. Instead, think of a Loan Agreement as standard practice when lending or borrowing money. There is no good reason for either party to want to avoid a Loan Agreement if it is entered in good faith.

Why Use Swyft Forms for Your Loan Agreement

Customized for you, by you

Create your own documents by answering our easy-to-understand questionnaires to get exactly what you need out of your Loan Agreement.

Right for your state

Each document on Swyft Forms is customized for your state.

How to Create a Loan Agreement with Swyft Forms

A poorly-composed Loan Agreement can be just as bad as not having one at all. Swyft Forms provides you with the right wording for a Loan Agreement in your jurisdiction with an attorney-vetted form.

The process is fast and easy. Our proprietary form generator can help you create your customized Loan Agreement in a few short minutes.

We'll ask a handful of simple questions. Just fill in the requested information, and we'll put it together. You can see your document being created as you go.

Once completed, simply download your form as a PDF or Word document from your secure online account.

What Information Will I Need to Create My Loan Agreement?

To create your document, please provide:

• Personal Information of the Borrower: Name and address of the person who's borrowing money and responsible for the repayment

• Personal Information of the Lender: Name and address of the person who's lending money and entitled to receive the repayment

• Principal Amount: The amount of money in question

• Interest: Money that is paid in excess of the loan amount as a condition of the loan

• Security: Any assets that will be used as collateral

• Maturity Date: Date by which the borrower is required to repay the money

• Default: How many days of nonpayment constitute a default

• Dispute Resolution: If a dispute about the loan arises, will it be settled through a court of law or arbitration?

• Governing State: Which of the state's laws will apply to the terms of the Loan Agreement?

Loan Agreement Signing Requirements

A Loan Agreement needs to be signed by the borrower and the lender. Loan Agreements don't need to be notarized, but you may choose to do so to avoid any legal complications.

What to Do With Your Loan Agreement

After creating and signing your Loan Agreement with Swyft Forms, you can download and print as many copies as you like. Both the borrower and the lender should retain a signed copy for their personal records. There is no need to file a Loan Agreement at the Recorder's Office.