A typical credit agreement defines the terms under which a lender will provide financing to the borrower and the parties should consider whether they wish to include the following conditions: The lender may ask the borrower to lend him the money as part of the loan agreement. If this is the case, the credit agreement should be clear: before you lend money to someone or provide services without payment, it is important to know if you need to have a credit agreement to protect yourself. You never really want to borrow money, goods or services without having a credit agreement, to make sure you are reimbursed or that you can take legal action to repay your money. The purpose of a credit agreement is to describe in detail what is borrowed and when the borrower must repay it and how. The credit agreement has specific conditions that describe exactly what is given and what is expected in return. Once executed, it is essentially a promise to pay by the lender to the borrower. The parties should consider whether interest should be paid on the loan to be granted and, if so, what the interest rate should be. There may be FCA implications, as explained below. You might also want to receive information about prepayment if the borrower wants to repay the loan early.

Many borrowers are worried about the down payment and you should include in your credit agreement a clause that talks about advance options, if any. If you authorize a prepayment, you must include this information and details, whether they are allowed to pay the full amount or only a portion in advance, and whether you ask for an advance fee if they wish. If you are asking for an advance fee, you must describe in detail the amount of this amount. Traditionally, lenders require that a percentage of the principal be paid in advance before they can pay the balance. If you do not authorize prepayment, you must specify that it is not allowed unless you, the lender, give written authorization. When a borrower is late with a loan and is unable to repay all or part of it, the lender may attempt to impose the guarantees it has taken if these are reserved under the investment conditions. In addition to the main sections described above, you have the option to add additional sections to deal with certain elements, as well as a section to make the validity of the document indisputable….