Commercial Loan Agreement

Why should I make a commercial loan agreement?

A loan agreement is essential for lending arrangements to ensure that both the borrower and the lender are on the same page with the terms and conditions of the loan. By setting out the specifics of the loan, such as interest rate, repayment schedule, and loan amount, the agreement establishes clear expectations for both parties. Legal Desk’s commercial loan agreement is particularly helpful, including an amortisation table that tracks both repayments and interest over time. This written agreement also serves as a solid record to minimise future disputes between lender and borrower. Additionally, lenders may benefit from additional collateral in the form of guarantors to secure their loans. Should any issues arise, a written loan agreement increases the possibility of court intervention to resolve any concerns with loan repayment.

What should I be aware of?

The commercial loan agreement serves as a means for business owners to acquire funds for their enterprises. Nonetheless, it is essential to note that lending money to shareholders, as an initial approach, is not permissible according to the Companies Act. Such an act constitutes an illegal shareholder loan, which requires appropriate regulations to ensure compliance with the law.

When dealing with corporate borrowers and lenders, it is imperative to ensure that the loan agreement is executed by individuals who have the legal authority to enter into binding contracts on behalf of the company. It is advisable to verify the eligibility of these individuals through a thorough review of the company’s registration details available on the official government portal of VIRK.DK . This ensures that the loan agreement is valid and enforceable. In addition, it mitigates the risk of unauthorised parties entering into agreements that do not align with the company’s best interests.

What is guarantor?

As mentioned earlier, it is an available option to secure one or more individuals to provide a guarantee for the commercial loan agreement. As a guarantor, you undertake the responsibility of repaying the loan to the lender in case the borrower is unable to fulfil their obligation.

This can be a great solution when extending a loan to a small business. Adding the company owner(s) as guarantors in the loan agreement offers reassurance that the loan will be repaid even if the company undergoes financial constraints that may lead to bankruptcy.

How do I make the loan agreement valid?

It is easy and quick to prepare a legally valid commercial loan agreement with the DKkonsult. You just fill out our form in which we ask you a number of questions. Based on your answers, the commercial loan agreement is automatically prepared. You will receive it as soon as the payment is completed.

The loan agreement is made valid by both parties signing and dating the document. You can do this easily and safely with NemID/MitID.

Be aware that it is eligible, signing on behalf of the company. Your loan agreement will then be valid and therefore no registration, knowledge, legal assistance or the like is required.

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