For related-party loans, use a rate at or above the IRS applicable federal rate. The AFR is published monthly and a rate below it raises imputed-interest issues — confirm the current AFR before finalizing. Nothing on this page tracks it.

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Still blank: lender, borrower, date, principal, purpose, interest rate, payment amount, first payment date, maturity date, grace days, cure days, default rate, late fee amount, late fee percentage, governing state.

Unsecured, with no guarantor. On a default, clause 6.2 leaves a claim against the borrower and nothing behind it.

The parties

Lender

Borrower legal name

Effective date

The loan

Principal $

Permitted use

Disbursed

Interest

Rate % per annum

Clause 2.1 states the rate is at or above the IRS applicable federal rate where that applies. Confirm the current AFR.

Repayment

Payment amount $

Your figure, not a computed one — this template does not build an amortization schedule.

First payment

Maturity

Security

Default

Grace days

Cure days

Default rate %

Late fee $

or % of payment

Clause 6.4 charges the greater of the two, so both are used.

Law

Governing state

What this document makes conditional

AccelerationOn an Event of Default, Lender may declare the whole balance due at once. Clause 6.2.

Prepayment without penaltyAny time, applied to accrued interest first, then principal. Clause 3.2.

The usury capInterest above the legal maximum is applied to reduce principal instead. Clause 7.2.

The security interestOnly where the loan is secured, and only once the UCC-1 is actually filed. Clause 5.1.

The personal guarantyLives in a separate Guaranty Agreement at Exhibit B, not in this document. Clause 5.2.

Default interestThe lesser of the stated rate and the maximum permitted by law. Clause 6.3.

The interest rate itselfOn a related-party loan, a rate below the IRS applicable federal rate raises imputed-interest issues. Adviser note.

Lender's past forbearanceNot enforcing once does not waive enforcing later. Clause 7.3.

Read back from the clauses in this draft. Not an opinion on whether a court would enforce them, which turns on the state and on facts a template cannot see.

Business Loan Agreement

Unsecured · No guaranty · Draft for review

Adviser note

Use this to document any loan that isn’t from a bank — a family loan, a private investor loan, or an owner personally lending money into their own business. Putting informal loans in writing protects both sides and avoids the IRS recharacterizing an undocumented “loan” as a gift or as equity.

For related-party loans, use an interest rate at or above the applicable federal rate (AFR) published monthly by the IRS to avoid imputed-interest issues — confirm the current AFR before finalizing.

This Business Loan Agreement (“Agreement”) is entered into as of , by and between (“Lender”) and (“Borrower”).

1.Loan amount and purpose

1.1 Principal Amount. Lender agrees to loan Borrower the principal sum of (the “Loan”), disbursed in a single lump sum on the Effective Date.

1.2 Purpose. Borrower will use the Loan proceeds for .

2.Interest

2.1 Interest Rate. The outstanding principal balance accrues interest at a fixed rate of per annum, calculated on a simple basis. This rate is at or above the IRS Applicable Federal Rate in effect as of the Effective Date for a loan of this term, if applicable.

3.Repayment

3.1 Repayment Schedule. Borrower will repay the Loan in monthly installments of (principal and interest), beginning , continuing until the Loan is repaid in full, with a final payment due on .

3.2 Prepayment. Borrower may prepay all or part of the outstanding balance at any time without penalty. Prepayments apply first to accrued interest, then to outstanding principal.

3.3 Application of Payments. Absent a default, each payment is applied first to accrued interest, then to outstanding fees, then to principal.

4.Repayment schedule summary

Term	Detail
Principal
Interest rate
Payment amount
First payment date
Maturity date

This table echoes, it does not compute

The payment figure is the one entered on the left. No amortization is calculated here — the result depends on the compounding basis, the day count and the disbursement pattern, and a number generated in a template would look authoritative without being checkable. Bring the figure from your lender, your spreadsheet or your accountant.

5.Security

5.1 Collateral. The Loan is unsecured. No collateral is pledged and no security interest is granted.

5.2 Personal Guaranty. None. No person guarantees the Borrower’s obligations under this Agreement.

6.Default

6.1 Events of Default. Each of the following is an “Event of Default”: (a) Borrower fails to make a payment within days of its due date; (b) Borrower becomes insolvent, files for bankruptcy, or makes an assignment for the benefit of creditors; (c) Borrower breaches any other material term of this Agreement and fails to cure within days of written notice.

6.2 Remedies. Upon an Event of Default, Lender may declare the entire unpaid principal balance and accrued interest immediately due and payable, and may pursue any remedy available at law, in equity, or (if secured) under the Uniform Commercial Code.

6.3 Default Interest. Amounts not paid when due accrue interest at the lesser of per annum or the maximum rate permitted by law, from the due date until paid.

6.4 Late Fee. A payment more than days late incurs a late fee of the greater of or of the missed payment.

7.General provisions

7.1 Governing Law. This Agreement is governed by the laws of the State of .

7.2 Usury Compliance. Notwithstanding any other provision, the total interest charged will not exceed the maximum rate permitted under applicable law; any excess is automatically applied to reduce principal.

7.3 No Waiver. Lender’s failure to enforce any provision of this Agreement does not waive its right to enforce that provision later.

7.4 Assignment. Lender may assign this Agreement and the amounts owed under it; Borrower may not assign its obligations without Lender’s written consent.

7.5 Entire Agreement. This Agreement, with any attached Exhibits, is the entire agreement between the Parties regarding the Loan and may be amended only in writing signed by both Parties.

7.6 Severability. If any provision is held unenforceable, the remaining provisions remain in effect.

Lender · date

Borrower · date