Loan Agreement - Business - Texas

BUSINESS LOAN AGREEMENT (TEXAS)

(Commercial-purpose drafting template — classify the transaction before use)

TRANSACTION CLASSIFICATION GATE

Complete this section before drafting economic terms:

☐ Commercial purpose confirmed: proceeds are primarily for business, commercial, investment, agricultural, or a similar purpose and not primarily for personal, family, or household use. See Tex. Fin. Code § 306.001(5).

☐ Lender status: [BANK / CREDIT UNION / LICENSED LENDER / PRIVATE LENDER / OTHER: __________]. Counsel has confirmed licensing, charter, federal-preemption, and disclosure rules applicable to this lender.

☐ Borrower and guarantors: [ENTITY / INDIVIDUAL / AFFILIATES]. Counsel has separately reviewed any guaranty and any personal, family, household, homestead, spouse, or community-property issue.

☐ Collateral: [UNSECURED / PERSONAL PROPERTY / REAL PROPERTY / MIXED]. If secured, use a separate security agreement and the correct perfection method; this loan agreement alone does not complete attachment or perfection.

☐ Qualified commercial loan analysis: [APPLIES / DOES NOT APPLY]. For qualified-loan treatment, verify the thresholds and any borrower attorney-and-accountant certification required by Tex. Fin. Code § 306.001(9).

☐ Current ceiling source and contract date: [OCCC PUBLICATION / DATE / CEILING]. Do not insert a rate from memory; the optional ceilings change over time.

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 Texas 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.

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]%, subject to the applicable lawful ceiling selected and documented for this transaction (the "Interest Rate").

3.4.2 Interest Calculation. Select one verified method: [ACTUAL/365 / 365-OVER-360 / 366-OVER-360 WHEN APPLICABLE / 30-OVER-360]. Tex. Fin. Code § 306.003 permits specified commercial-loan methods, but the chosen formula and all economic terms must be modeled against the applicable ceiling.

3.4.3 Texas Usury Compliance. The Parties intend that interest contracted for, charged, or received will not exceed the ceiling applicable to this lender and transaction. For ceiling testing, counsel shall identify every amount that constitutes interest and apply the aggregation, amortization, and spreading rules in Tex. Fin. Code §§ 302.001(c) and 306.004. No contract sentence is a substitute for the statutory correction requirements. If a violation is actually discovered, any correction and notice must satisfy Tex. Fin. Code § 305.103 and other applicable law.

3.4.4 Economic-Term Schedule. Before execution, attach a schedule listing the stated rate, index, spread, floor, default margin, commitment fee, administration fee, unused fee, exit or prepayment amount, late charge, returned-payment fee, borrower-paid lender or third-party charges, and counsel's classification of each item for ceiling purposes.

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.

4.1.1 Secured Loan Documents [IF APPLICABLE]. The security agreement must identify the secured obligations and describe the collateral sufficiently for attachment under Tex. Bus. & Com. Code § 9.203. Counsel shall determine governing law and perfection under §§ 9.301 and 9.310 and any applicable possession, control, certificate-of-title, real-property, fixture, or federal regime.

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.

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.

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, incur, assume, or permit to exist any Lien on any of its assets, other than Permitted Liens.

7.3 Distributions. Make any distributions, dividends, or other payments to equity holders that would impair Borrower's ability to meet its obligations under the Loan Documents.

7.4 Fundamental Changes. Merge, consolidate, liquidate, dissolve, or sell all or substantially all of its assets without Lender's prior written consent.

7.5 Change of Business. Change the nature of its business in any material respect.

8. FINANCIAL REPORTING & INSPECTION RIGHTS

8.1 Financial Reporting. Borrower shall provide the financial statements described in Section 6.1, together with such additional information as Lender may reasonably request from time to time.

8.2 Inspection Rights. Lender may inspect Borrower's books, records, and facilities upon reasonable notice and during normal business hours.

9. EVENTS OF DEFAULT

9.1 Events of Default

Each of the following constitutes an "Event of Default":

(a) Payment Default. Borrower fails to pay any principal, interest, fees, or other amounts when due.

(b) Covenant Default. Borrower fails to perform any covenant in this Agreement or any other Loan Document and such failure continues for [number] days after notice.

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

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

(e) Insolvency. Borrower (i) becomes insolvent; (ii) admits in writing its inability to pay debts as they become due; (iii) makes a general assignment for the benefit of creditors; or (iv) commences or has commenced against it any bankruptcy or similar proceeding.

(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 Contractual Set-Off [OPTIONAL]. To the extent permitted by applicable law, Lender may set off matured amounts that Lender actually owes Borrower against matured Obligations. Delete references to deposit-account setoff unless Lender is the depository institution and counsel has verified the account ownership, contractual right, and applicable banking law.

10.3 Equitable Relief. A Party may request provisional or equitable relief where the governing law and facts support it. The court or arbitrator retains authority to decide the elements, proof, scope, and any security or bond; this Agreement does not create automatic entitlement or eliminate those requirements.

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, subject to Section 3.4.3.

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.

Each fee must appear in the Section 3.4.4 schedule. Do not label a fee "not interest" unless current Texas law and the actual payee, purpose, amount, and transaction support that classification. If a delinquency charge is used for a Chapter 306 commercial loan, § 306.006 permits it only after an amount remains in default at least 10 days and caps it at five percent of the defaulted installment or amount.

11.2 Taxes [OPTIONAL — TAX REVIEW REQUIRED]

Payments are subject to withholding required by applicable law. Insert any gross-up only after tax counsel identifies the covered taxes, exclusions, forms, notice, mitigation, refund-credit, and lender-cooperation provisions. Delete this section if no reviewed gross-up applies.

11.3 Borrower Indemnification of Lender

Borrower (the "Indemnifying Party") shall indemnify and hold harmless Lender and the other identified Indemnified Parties from [SPECIFIC THIRD-PARTY CLAIMS AND LOSSES], but only to the extent caused by [SPECIFIED BORROWER CONDUCT]. The provision does not apply to the extent prohibited by law or to an Indemnified Party's fraud, bad faith, gross negligence, willful misconduct, material breach of a Loan Document, or violation of law. Counsel shall separately determine whether a defense duty, advancement, control of defense, settlement consent, or interparty claim is intended.

12. LIMITATION OF LIABILITY; RISK ALLOCATION

12.1 Lender Liability Cap
Do not include a lender liability cap by default. If negotiated, state the covered claims, amount, exclusions, bargaining context, and interaction with statutory remedies. At minimum, exclude liability that applicable law does not permit the Parties to limit and address fraud, bad faith, gross negligence, willful misconduct, confidentiality/data-security duties, and equitable relief.

12.2 Waiver of Consequential Damages
If negotiated, neither Party shall be liable for [SPECIFIC CATEGORIES] arising from [SPECIFIC CLAIMS], except for [CARVEOUTS]. Counsel shall address whether lost profits are direct or consequential in the contemplated circumstances and preserve remedies that cannot lawfully be waived.

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 Texas, without giving effect to conflicts of law principles.

13.2 Exclusive Jurisdiction

Each Party submits to the state courts located in [County, Texas] and, only when an independent basis for federal subject-matter jurisdiction exists, the federal court serving that county. Each Party waives [SPECIFY WAIVABLE VENUE OR FORUM OBJECTIONS AFTER COUNSEL REVIEW].

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] under [IDENTIFIED RULES AND VERSION]. The seat shall be [City, Texas]. Specify governing arbitration law, arbitrator count and qualifications, discovery, fees, provisional relief, confidentiality, consolidation, class treatment, and award/judgment procedure. Delete this section unless all related jury-waiver and court-forum language is conformed to the arbitration election.

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

13.4 Jury Trial Waiver [OPTIONAL]

EACH PARTY, AFTER THE OPPORTUNITY TO CONSULT COUNSEL, [KNOWINGLY AND VOLUNTARILY / OTHER REVIEWED STANDARD] WAIVES A JURY TRIAL FOR [DEFINED CLAIMS] TO THE EXTENT THE WAIVER IS ENFORCEABLE. DELETE THIS SECTION UNLESS TEXAS COUNSEL HAS REVIEWED THE PARTIES, BARGAINING CONTEXT, CONSPICUOUSNESS, SCOPE, AND INTERACTION WITH ANY ARBITRATION CLAUSE.

Lender initials: [____] Borrower initials: [____]

13.5 Equitable Relief

Nothing in this Section 13 prevents a Party from requesting provisional or equitable relief from a tribunal with jurisdiction, subject to Section 10.3 and the tribunal's authority.

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 a provision is held invalid or unenforceable, the remaining provisions remain effective to the extent the tribunal permits. A tribunal may sever or modify the affected provision only to the extent authorized by the governing law.

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. The Parties agree to conduct this transaction by electronic means for the methods selected here: [EMAIL PDF / PLATFORM / OTHER]. Under Tex. Bus. & Com. Code §§ 322.005, 322.007, and 322.009, electronic effect depends on agreement, attribution, context, and other applicable law; retain evidence showing who executed each record and the method used.

14.7 Notices
Contractual 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). A statutory notice, cure, disposition, foreclosure, or other mandatory communication must follow the method and timing required by the governing law rather than this general clause.

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: ______________________________

SOURCES AND REFERENCES

• Texas Legislature, Finance Code Chapter 302 — general maximum rate, aggregation, and real-property spreading rules.
• Texas Legislature, Finance Code Chapter 303 — optional ceilings, variable rates, and publication framework.
• Texas Legislature, Finance Code Chapter 305 — usury remedies and statutory correction procedure.
• Texas Legislature, Finance Code Chapter 306 — commercial-loan definitions, calculation methods, prepayment amounts, and authorized charges.
• Texas Legislature, Business & Commerce Code Chapter 9 — secured-transactions attachment, governing law, and perfection.
• Texas Legislature, Business & Commerce Code Chapter 322 — electronic transactions and signatures.
• Texas Office of Consumer Credit Commissioner, Interest Rates — current and archived Texas Credit Letters and published ceilings.