BUSINESS LOAN AGREEMENT

(Comprehensive Template – Choice of Law)

[// GUIDANCE: This template is drafted for a bilateral commercial loan transaction (single lender, single borrower). It is intentionally broad so counsel can tailor to secured or unsecured structures, revolving or term facilities, and single- or multi-draw scenarios. All bracketed text requires customization. Remove all guidance comments and unused bracketed options prior to execution.]

TABLE OF CONTENTS

1. Document Header (Title, Parties & Recitals)
2. Definitions
3. The Loan
4. Conditions Precedent
5. Representations & Warranties
6. Affirmative Covenants
7. Negative Covenants
8. Financial Reporting & Inspection Rights
9. Events of Default
10. Remedies
11. Fees, Expenses & Indemnification
12. Limitation of Liability; Risk Allocation
13. Governing Law; Jurisdiction; Dispute Resolution
14. Miscellaneous Provisions
15. Execution Block

1. DOCUMENT HEADER

1.1 Title

BUSINESS LOAN AGREEMENT

1.2 Parties

This Business Loan Agreement (the “Agreement”) is made and entered into as of [Effective Date] (the “Effective Date”), by and between:

(a) [Lender Legal Name], a [State of Formation] [entity type] with its principal place of business at [Address] (“Lender”); and

(b) [Borrower Legal Name], a [State of Formation] [entity type] with its principal place of business at [Address] (“Borrower”).

Lender and Borrower are sometimes referred to herein individually as a “Party” and collectively as the “Parties.”

1.3 Recitals

A. Borrower has requested that Lender extend credit for general business purposes in the aggregate principal amount of up to [Loan Amount] (the “Loan”).
B. Lender is willing to extend such credit to Borrower upon the terms and subject to the conditions set forth in this Agreement.
C. The Parties intend this Agreement to set forth their entire understanding regarding the Loan.

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, and intending to be legally bound, the Parties agree as follows:

2. DEFINITIONS

For purposes of this Agreement, capitalized terms shall have the meanings set forth below. Defined terms include singular and plural, and the use of one gender includes all genders.

“Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with such Person.

“Applicable Law” means all laws, statutes, treaties, rules, regulations, ordinances, orders, codes, and judgments of any Governmental Authority that apply to a Party, this Agreement, or the transactions contemplated herein.

“Business Day” means any day other than a Saturday, Sunday, or day on which commercial banks in [Governing Law State] are authorized or required to close.

“Event of Default” has the meaning set forth in Section 9.1.

“Governmental Authority” means any federal, state, provincial, local, or foreign government, or political subdivision thereof, and any entity exercising executive, legislative, judicial, regulatory, or administrative functions of or pertaining to government.

“Indemnified Party” and “Indemnifying Party” have the respective meanings set forth in Section 11.3.

“Interest Period,” “Interest Rate,” “Loan Documents,” “Maturity Date,” “Obligations,” “Permitted Liens,” “Principal Balance,” and other capitalized terms are defined where first used.

[// GUIDANCE: Insert any additional defined terms specific to your transaction, e.g., “Collateral,” “Revolving Commitment,” etc.]

3. THE LOAN

3.1 Commitment & Purpose

3.1.1 Commitment. Subject to the terms of this Agreement, Lender agrees to lend to Borrower, and Borrower may borrow from Lender, up to an aggregate principal amount not to exceed [Loan Amount] (the “Commitment”).

3.1.2 Purpose. The proceeds of the Loan shall be used solely for [describe permitted use, e.g., “working capital and general corporate purposes”] and for no other purpose without Lender’s prior written consent.

3.2 Note

The Loan shall be evidenced by a promissory note substantially in the form of Exhibit A (the “Note”), duly executed by Borrower in favor of Lender in the principal amount of the Commitment.

3.3 Disbursements

3.3.1 Funding Mechanics. Borrower shall submit a written borrowing request to Lender at least [number] Business Days prior to the desired funding date.

3.3.2 Disbursement Account. Loan proceeds shall be wired to Borrower’s account designated in writing to Lender (the “Disbursement Account”).

3.4 Interest

3.4.1 Interest Rate. The outstanding Principal Balance shall bear interest at a per-annum rate equal to [Reference Rate] + [Spread]%, but in no event higher than the Maximum Rate allowed by Applicable Law (the “Interest Rate”).

3.4.2 Interest Calculation. Interest shall be computed on the basis of a [360/365]-day year for the actual number of days elapsed.

3.5 Payments

3.5.1 Scheduled Payments. Borrower shall make consecutive monthly payments of accrued interest (and, if amortizing, principal) commencing on [First Payment Date] and continuing on each Payment Date thereafter until the Maturity Date.

3.5.2 Maturity Date. All unpaid principal, accrued but unpaid interest, and any other Obligations shall be due and payable in full on [Maturity Date] (the “Maturity Date”).

3.5.3 Prepayment. Borrower may, at any time and from time to time, prepay the Loan, in whole or in part, without premium or penalty [or insert prepayment premium], provided that Borrower gives Lender not less than [number] Business Days’ advance written notice of any voluntary prepayment.

3.6 Use of Proceeds Certification

Borrower certifies that neither the proceeds of the Loan nor any other funds of Borrower will be used directly or indirectly for any purpose in violation of Applicable Law, including without limitation those pertaining to sanctioned transactions, corruption, or money laundering.

4. CONDITIONS PRECEDENT

Lender’s obligation to fund the initial advance (and each subsequent advance, if any) is subject to satisfaction, in form and substance satisfactory to Lender, of the following conditions precedent:

4.1 Delivery of executed Loan Documents, including this Agreement, the Note, any Security Agreement, and such other documents as Lender may reasonably request.

4.2 Delivery of resolutions, incumbency certificates, and other evidence of Borrower’s authority to enter into and perform its obligations hereunder.

4.3 Delivery of certificates of insurance naming Lender as loss payee/additional insured, if applicable.

4.4 No Material Adverse Effect shall have occurred since the date of Borrower’s most recent financial statements provided to Lender.

4.5 Payment by Borrower of all fees and expenses then due under Section 11.1.

[// GUIDANCE: Insert any additional customary or deal-specific conditions precedent.]

5. REPRESENTATIONS & WARRANTIES

Borrower represents and warrants to Lender as of the Effective Date and on each date that any advance is made:

5.1 Organization; Good Standing. Borrower is duly organized, validly existing, and in good standing under the laws of its jurisdiction of formation and is duly qualified to do business in each jurisdiction where its ownership of property or conduct of business requires such qualification.

5.2 Authority; Enforceability. Borrower has the requisite power and authority to execute, deliver, and perform the Loan Documents. The Loan Documents constitute legal, valid, and binding obligations of Borrower enforceable against Borrower in accordance with their terms, except as such enforceability may be limited by bankruptcy, insolvency, or similar laws affecting creditors’ rights generally.

5.3 No Conflict. The execution, delivery, and performance of the Loan Documents do not violate any organizational documents of Borrower, any material contract to which Borrower is a party, or any Applicable Law.

5.4 Financial Statements. Borrower’s financial statements delivered to Lender are complete and correct in all material respects and fairly present Borrower’s financial condition and results of operations as of the dates and for the periods indicated.

5.5 Litigation. Except as disclosed in Schedule 5.5, there is no litigation, arbitration, or proceeding pending or, to Borrower’s knowledge, threatened against Borrower that would reasonably be expected to have a Material Adverse Effect.

5.6 Compliance With Law. Borrower is in compliance with all Applicable Law in all material respects.

[// GUIDANCE: Insert any industry-specific reps (e.g., environmental, intellectual property) as needed.]

5.7 Survival. All representations and warranties survive the execution and delivery of the Loan Documents and continue in effect until the Obligations are paid in full.

6. AFFIRMATIVE COVENANTS

Until payment in full of the Obligations, Borrower covenants and agrees:

6.1 Financial Reporting. Borrower shall deliver to Lender:
(a) within [number] days after the end of each fiscal quarter, unaudited quarterly financial statements; and
(b) within [number] days after the end of each fiscal year, audited annual financial statements prepared by independent certified public accountants.

6.2 Existence; Compliance. Borrower shall preserve its legal existence and duly comply with all Applicable Law.

6.3 Books & Records; Inspection. Borrower shall maintain proper books and records and permit Lender, upon reasonable notice and during normal business hours, to inspect the same and to conduct field examinations.

6.4 Taxes. Borrower shall timely file all tax returns and pay all taxes when due, except for taxes being contested in good faith by appropriate proceedings and for which adequate reserves are maintained.

6.5 Insurance. Borrower shall maintain insurance on its properties in such amounts and against such risks as are customary for similarly situated businesses, naming Lender as lender loss payee with respect to property policies.

6.6 Further Assurances. Borrower shall execute and deliver such additional documents and instruments as Lender may reasonably request to effectuate the transactions contemplated hereby.

7. NEGATIVE COVENANTS

Without Lender’s prior written consent, Borrower shall not:

7.1 Indebtedness. Incur, assume, or permit to exist any Indebtedness other than (a) the Obligations, (b) trade debt in the ordinary course of business, and (c) other Indebtedness listed in Schedule 7.1.

7.2 Liens. Create or permit to exist any Lien on any of its property or assets except Permitted Liens.

7.3 Dispositions. Sell, transfer, lease, or otherwise dispose of assets except (a) inventory in the ordinary course of business and (b) obsolete or worn-out property disposed of in the ordinary course of business.

7.4 Restricted Payments. Declare or make any dividend or other distribution on account of equity interests or redeem, purchase, or otherwise acquire any equity interests, except [describe permitted dividends/share repurchases].

7.5 Mergers; Acquisitions. Merge or consolidate with any other Person or acquire all or substantially all of the assets of any other Person.

7.6 Change in Business. Engage in any business materially different from that conducted on the Effective Date.

8. FINANCIAL REPORTING & INSPECTION RIGHTS

8.1 Financial Covenants. Borrower shall maintain:
(a) a minimum Debt Service Coverage Ratio of not less than [ratio] to 1.0, tested [quarterly/annually]; and
(b) a maximum Leverage Ratio of not more than [ratio] to 1.0, tested [quarterly/annually].

8.2 Certificates. Together with each delivery of financial statements, Borrower shall deliver a compliance certificate (i) certifying no Event of Default (or detailing any Event of Default), and (ii) demonstrating compliance with the financial covenants set forth above.

8.3 Inspection; Audit. Lender may, at Borrower’s expense (subject to a cap of [number] field examinations per year unless an Event of Default has occurred), inspect Borrower’s books, records, and facilities.

9. EVENTS OF DEFAULT

9.1 Enumerated Defaults

Each of the following constitutes an “Event of Default”:

(a) Payment Default. Borrower fails to pay any principal, interest, or other amount due under any Loan Document when due and such failure continues for five (5) Business Days.

(b) Covenant Default. Borrower fails to perform or observe any covenant or agreement contained in this Agreement (other than payment) and, if capable of cure, such failure continues for thirty (30) days after notice from Lender.

(c) Misrepresentation. Any representation or warranty made by Borrower proves false or misleading in any material respect when made or deemed made.

(d) Cross-Default. Borrower defaults under any other agreement involving Indebtedness in excess of [threshold amount].

(e) Insolvency. Borrower becomes insolvent, makes an assignment for the benefit of creditors, or commences any proceeding under any bankruptcy or insolvency law.

(f) Judgments. One or more judgments are entered against Borrower in an aggregate amount exceeding [threshold amount] that remains unstayed, unpaid, and undischarged for sixty (60) days.

(g) Change of Control. Any Change of Control of Borrower without Lender’s prior written consent.

9.2 Automatic Acceleration

Upon the occurrence of an Event of Default described in Section 9.1(e) (Insolvency), all Obligations shall automatically become immediately due and payable without demand or notice.

9.3 Optional Acceleration

Upon any other Event of Default, Lender may, by written notice to Borrower, declare all or any part of the Obligations immediately due and payable.

10. REMEDIES

10.1 Remedies Cumulative. Lender’s rights and remedies under the Loan Documents are cumulative and not exclusive of any rights or remedies available at law or in equity.

10.2 Right of Set-Off. Lender may set off and apply any deposits, balances, or other sums owed by Lender to Borrower against the Obligations.

10.3 Specific Performance; Injunctive Relief. Borrower acknowledges that monetary damages may be inadequate to compensate Lender for any breach and agrees that Lender shall be entitled to specific performance and injunctive relief without the necessity of proving actual damages or posting bond.

10.4 Attorney Fees and Costs. Borrower shall pay on demand all reasonable attorney fees and expenses incurred by Lender in enforcing the Loan Documents, whether or not suit is filed.

10.5 Post-Default Interest. Following an Event of Default, the Interest Rate shall increase automatically by [Default Margin] percentage points per annum (the “Default Rate”) until all Events of Default are cured.

11. FEES, EXPENSES & INDEMNIFICATION

11.1 Fees and Expenses

Borrower shall pay (a) a commitment fee equal to [percentage]% of the Commitment, payable on the Effective Date; (b) an annual loan administration fee of [amount], payable in advance; and (c) all reasonable out-of-pocket expenses (including attorney fees) incurred by Lender in connection with the negotiation, documentation, and closing of the Loan.

11.2 Taxes

All payments by Borrower shall be made free and clear of, and without deduction for, any taxes, assessments, or other charges, except as required by Applicable Law. If any withholding is so required, Borrower shall gross-up payments so that Lender receives the full amount it would have received absent such withholding.

11.3 Borrower Indemnification of Lender

Borrower (the “Indemnifying Party”) shall indemnify, defend, and hold harmless Lender and its Affiliates, and their respective directors, officers, employees, and agents (each, an “Indemnified Party”), from and against any and all losses, claims, damages, liabilities, and related expenses (including reasonable attorney fees) arising out of or resulting from (a) the Loan Documents, (b) the use of any Loan proceeds, or (c) the existence or enforcement of any Lien or security interest in any Collateral, except to the extent such losses are finally judicially determined to have resulted from the gross negligence or willful misconduct of the Indemnified Party.

12. LIMITATION OF LIABILITY; RISK ALLOCATION

12.1 Lender Liability Cap
Notwithstanding any provision herein, Lender’s aggregate liability arising out of or related to the Loan Documents shall in no event exceed the aggregate amount actually received by Lender from Borrower under the Loan Documents (the “Liability Cap”). Borrower acknowledges that the Liability Cap is a material inducement for Lender to enter into this Agreement.

12.2 Waiver of Consequential Damages
To the fullest extent permitted by Applicable Law, neither Party shall be liable for any special, indirect, exemplary, punitive, or consequential damages (including lost profits) arising under or in connection with the Loan Documents.

13. GOVERNING LAW; JURISDICTION; DISPUTE RESOLUTION

13.1 Governing Law

This Agreement and the other Loan Documents shall be governed by and construed in accordance with the internal laws of the State of [Governing Law State], without giving effect to conflicts of law principles.

13.2 Exclusive Jurisdiction

Each Party irrevocably submits to the exclusive jurisdiction of the state and federal courts located in [County, State] for any action or proceeding arising out of or relating to the Loan Documents, and each Party waives any objection based on inconvenient forum.

13.3 Arbitration [OPTIONAL]

[OPTION 1 – INSERT IF ELECTING ARBITRATION]
Any dispute, claim, or controversy arising out of or relating to the Loan Documents shall be resolved by binding arbitration administered by [Arbitration Administrator] in accordance with its Commercial Arbitration Rules. The seat of arbitration shall be [City, State], and judgment on the award rendered by the arbitrator(s) may be entered in any court having jurisdiction. Nothing herein shall restrict Lender’s right to seek provisional or injunctive relief in aid of arbitration.

[OPTION 2 – DELETE SECTION 13.3 IF ARBITRATION NOT SELECTED]

13.4 Jury Trial Waiver [OPTIONAL]

EACH PARTY HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT TO A TRIAL BY JURY IN ANY LEGAL ACTION ARISING OUT OF OR RELATING TO THE LOAN DOCUMENTS.

13.5 Equitable Relief

Nothing in this Section 13 shall limit Lender’s right to obtain injunctive relief, specific performance, or other equitable remedies from any court of competent jurisdiction.

14. MISCELLANEOUS PROVISIONS

14.1 Amendments and Waivers
No amendment, modification, or waiver of any provision of the Loan Documents shall be effective unless set forth in a written instrument signed by the Party to be charged. Any waiver shall be limited to the specific instance and purpose for which it was given.

14.2 Assignment
Borrower may not assign or delegate any rights or obligations under the Loan Documents without Lender’s prior written consent. Lender may assign its rights, in whole or in part, to any Affiliate or to any successor-in-interest.

14.3 Successors and Assigns
The Loan Documents shall be binding upon and inure to the benefit of the Parties and their respective permitted successors and assigns.

14.4 Severability
If any provision of the Loan Documents is held invalid or unenforceable, the remaining provisions shall remain in full force and effect, and the invalid or unenforceable provision shall be construed to give the maximum legally permissible effect to the Parties’ intent.

14.5 Entire Agreement
The Loan Documents collectively constitute the entire agreement of the Parties regarding the subject matter hereof and supersede all prior or contemporaneous oral or written agreements.

14.6 Counterparts; Electronic Signatures
The Loan Documents may be executed in counterparts, each of which shall be deemed an original, and all of which together constitute one and the same instrument. Delivery of an executed counterpart via facsimile, email (PDF), or other electronic means shall be as effective as delivery of a manually executed counterpart.

14.7 Notices
All notices shall be in writing and deemed given (a) when delivered personally, (b) two (2) Business Days after deposit with a nationally recognized overnight courier, or (c) on the date transmitted by confirmed email or facsimile, in each case to the addresses set forth below (or such other address designated in writing).

14.8 Headings; Interpretation
Headings are for convenience only and shall not affect interpretation. The words “include,” “includes,” and “including” are deemed to be followed by “without limitation.”

14.9 Time of the Essence
Time is of the essence with respect to all payment and performance obligations of Borrower under the Loan Documents.

15. EXECUTION BLOCK

IN WITNESS WHEREOF, the Parties have caused this Business Loan Agreement to be executed by their duly authorized representatives as of the Effective Date.

LENDER:
[LENDER LEGAL NAME]

By: ____
Name: ____
Title: ____

Date: ______

BORROWER:
[BORROWER LEGAL NAME]

By: ____
Name: ____
Title: ____

Date: ______

[// GUIDANCE: Consider adding notary acknowledgment or witness lines if required by the governing jurisdiction or internal corporate policies.]

EXHIBIT A

Form of Promissory Note
[// GUIDANCE: Attach a standard promissory note reflecting the same principal amount, interest rate, payment schedule, default rate, and maturity as set forth in Sections 3.2-3.5.]

EXHIBIT B

Compliance Certificate
[// GUIDANCE: Include quarterly/annual certificate template for Borrower to certify financial covenant compliance.]

EXHIBIT C

Borrowing Request Form
[// GUIDANCE: Provide form of advance request with representations reaffirming no Event of Default and accuracy of representations & warranties.]