Loan Agreement Template

A Loan Agreement is a detailed contract between a lender and a borrower that sets out everything about a loan: the amount, the interest, the repayment installments, any collateral, and what happens if the borrower defaults. It goes further than a simple promissory note by adding the obligations of both sides, remedies for non-payment, and the governing law that applies. Businesses, private lenders, and individuals use one whenever a loan is large enough that both parties want the full terms in writing and signed. The two-party signature block is what makes those terms binding.

This layout groups the parties, the loan terms, the security, and the default clauses in order, then closes with a dated signature block for both the lender and the borrower. It is a general-purpose layout with the sections most loan agreements need — not financial or legal advice. Interest and lending rules, including usury caps, differ by jurisdiction, so confirm your local limits before setting a rate and have an attorney review the agreement for anything substantial.

How this document is used

A company lends money to a supplier and signs an agreement listing monthly installments and a security interest in equipment. A private investor loans funds to a startup and wants collateral, a clear default clause, and a governing-law provision. Two business partners formalize an internal loan so it is not mistaken for a gift or capital contribution. In each case the agreement removes ambiguity: the amount, the rate, the schedule, and the remedies are all written down and signed by both sides.

Set the amounts and schedule before signing

Enter the principal, the annual interest rate, and the installment amount and frequency before signing. Describe any collateral in the security section, or leave it blank for an unsecured loan. Open the Word (DOCX) file to edit clauses, add prepayment or acceleration language, and set the governing law. The fillable PDF suits signing once the terms are settled. Keep both signature blocks intact so the agreement is ready to execute.

Common mistakes to avoid

Do not leave the interest rate or installment schedule undefined — state the annual rate and the exact payment amount and dates. Do not forget the default and remedies section, which explains what the lender can do if payments stop. If the loan is secured, describe the collateral precisely. And make sure both the lender and the borrower sign and date the agreement; an unsigned contract binds no one.

Example scenario

A lender advances $25,000 to a small business at 6% annual interest, repaid in 24 monthly installments, secured by the company's delivery van. The agreement lists a 15-day grace period, an acceleration clause on default, and the state whose law governs. Both parties sign and date two copies at closing and each keeps one. When the borrower asks to pay early, they use the prepayment clause already written into the document rather than negotiating from scratch.

Choosing PDF or Word

This page provides a printable fillable PDF and an editable Word (DOCX) file. Use the Word file when you need to change clauses, adjust the schedule, or add collateral and governing-law terms before printing, and the PDF when the loan is settled and you just need to fill and sign. Both include a dated, two-party signature block so the agreement is ready to sign.