Small Business Loan Agreement Template


Greetings, small business owners! If you’re looking for financial assistance to grow your business, you might be considering a small business loan. However, getting a loan can be a complex and daunting process. It’s important to understand what you’re agreeing to before signing any loan agreement, which is where a small business loan agreement template comes in handy. In this article, we’ll discuss everything you need to know about small business loan agreement templates, including how to use them effectively, and important details you should include when creating one.

What is a Small Business Loan Agreement?

A small business loan agreement is a written document that outlines the terms and conditions of a loan. This agreement is a legally binding contract between the borrower (the small business) and the lender (a financial institution or individual). Loan agreements are essential for both parties as it specifies how much money will be loaned, when it will be repaid, and the interest rate attached to the loan.

Why Do You Need a Small Business Loan Agreement Template?

Creating a loan agreement from scratch can be extremely challenging, especially if you’re not familiar with legal terminologies. A small business loan agreement template can help simplify the process by providing a pre-designed structure, making it easier to fill in specific details. A loan agreement template will also ensure that nothing important is left out of the agreement.

How to Use a Small Business Loan Agreement Template

Using a small business loan agreement template is simple! The template will provide you with a basic structure that you can customize to suit your needs. Start by downloading a free loan agreement template from a reliable source, such as legal websites, and adapt it to include details specific to your loan. You can tailor the agreement to include specifics such as the interest rate, payment schedule, and security offered.

What to Include in a Small Business Loan Agreement Template

A small business loan agreement should include several key details, such as:

Key Details
Names and Contact Information
Include the names and contact details of the borrower and lender at the beginning of the loan agreement.
Loan Amount and Payment Terms
Outline the amount of money being loaned and the repayment schedule, including payment amounts and payment dates.
Interest Rates
Specify the interest rate attached to the loan, as well as how it’s calculated and the frequency.
Clarify what collateral (if any) is being used to secure the loan, such as equipment or property.
Default Conditions
Explain what will happen if the borrower defaults on the loan, including late fees, additional penalties, and collection procedures.
Governing Law and Jurisdiction
Specify the governing law and jurisdiction that will apply to the loan agreement.
Signatures and Date
Both parties should sign and date the loan agreement to make it legally binding.


1. What happens if I can’t make a payment?

If you’re unable to make a payment on time, contact the lender immediately to discuss alternatives before the payment is due. Late payments can incur additional fees and negatively impact your credit score.

2. What is a security agreement?

A security agreement is a legal contract that specifies the collateral used to secure a loan. It provides the lender with the right to seize the collateral if the borrower defaults on the loan.

3. Can I modify a loan agreement after signing?

It’s possible to modify a loan agreement after signing, but both parties need to agree to the changes in writing and sign an addendum to the agreement.

4. Do I need a lawyer to create a loan agreement?

It’s not required to have a lawyer to create a loan agreement, but it’s recommended that you have a lawyer review the agreement before signing.

5. Is a loan agreement legally binding?

Yes, a loan agreement is legally binding once signed by both parties.

6. Can I use a loan agreement for a personal loan?

Yes, loan agreements can be used for both personal and business loans.

7. Does a loan agreement need to be notarized?

Notarization typically isn’t required for a loan agreement to be legally binding. However, some lenders may require notarization for added protection.

8. What is the difference between an interest rate and an APR?

The interest rate is the cost of borrowing the money, while the APR (Annual Percentage Rate) is the total cost of borrowing, including interest and any other fees associated with the loan.

9. Can I cancel a loan agreement?

Once the loan agreement is signed by both parties, it cannot be canceled unless both parties agree to cancel the agreement in writing.

10. Can I change the payment due date on a loan agreement?

You may be able to change the payment due date on a loan agreement but, it typically requires a written agreement between both parties.

11. What is a prepayment penalty?

A prepayment penalty is a fee charged by the lender if the borrower repays the loan before the agreed-upon date.

12. Can I extend the loan term on a loan agreement?

You may be able to extend the loan term by amending the loan agreement. This will depend on the lender’s policies and the borrower’s eligibility to extend the loan term.

13. What happens if the lender goes out of business?

If the lender goes out of business, the loan agreement will still remain in effect. The lender’s assets, including the loan, may be sold to another lender or debt collector.


In conclusion, a small business loan agreement template is an essential tool for anyone looking to secure a loan for their small business. It simplifies a complex process, ensuring both parties understand the details of the loan agreement. Remember, it’s essential to read and understand the loan agreement before signing on the dotted line. Take your time and don’t be afraid to ask questions. Happy borrowing!


This article is for informational purposes only and does not constitute legal advice. We recommend that you seek advice from a legal professional before taking any action related to loan agreements or other legal matters.