Commercial Loan Agreement Page 3
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14Social Enterprise Associates’ Tip Sheet #7: Commercial Loan Agreement
and payable as set forth in the Note. The Borrower may
borrow, repay and reborrow amounts hereunder provided
that the aggregate principal amount outstanding shall not, at
any time, exceed the amount of the Loan. ADVANCES
Also in Section 2, because this particular
OF LOAN PRINCIPAL ARE AT THE BANK'S SOLE
agreement is a form designed to work for
DISCRETION, AND THE BANK MAY ELECT TO
multiple types of financial products, it describes
the mechanics of multiple products. When you
MAKE OR DECLINE TO MAKE ANY ADVANCE
get your own loan, your bank might delete all the
REQUESTED BY THE BORROWER.
language that isn‟t applicable to your particular
(c) Revolving Credit. If this Agreement provides for a
agreement.
Revolving Credit, the Borrower may borrow, repay and
reborrow amounts hereunder provided that the aggregate
It may go without saying, but when a clause uses
BOLDFACE ALLCAPS, it is probably because
principal amount outstanding shall not, at any time, exceed
(1) courts have determined that such a clause is
the amount of the Loan. Loan principal shall bear interest
only enforceable if it is conspicuous; (2) it is a
and be due and payable in accordance with the terms of the
really big deal; or (3) both. Obviously, you
Note. The Borrower agrees to pay to the Bank, on a
should make sure that you read and understand
quarterly basis, a commitment fee calculated at the rate of
these clauses.
per annum on the daily unused amount of the Bank's
revolving credit commitment hereunder. The Bank agrees,
so long as the Borrower is not in default, to make advances
as requested by the Borrower.
(d) Standby Credit and Term Loan. If this Agreement
provides for a Standby Credit and Term Loan, from the
date hereof and continuing for a period ending on
____________________ (the "Draw Period"), the
Borrower may borrow from time to time, amounts
hereunder provided that the aggregate principal amount
borrowed shall not, at any time, exceed the amount of the
Loan. The Bank agrees, so long as the Borrower is not in
default, to make advances as requested by the Borrower.
Commencing upon the expiration of the Draw Period the
principal Loan balance then outstanding shall be repaid
over a period of ___________________ (_____ ) months
(the "Repayment Period"). The Loan principal shall bear
interest and shall be due and payable as set forth in the
Note.
3. REPRESENTATIONS. The Borrower hereby
Section 3 details representations. Often called
represents to the Bank that:
Representations and Warranties (or just Reps and
Warrants), representations are some of the most
(a) Type of organization. The Borrower is a a corporation,
important words in an agreement. This is
a limited liability company, a limited partnership,
because these statements are the assertions you
an individual,
a general partnership, other.
make to the Bank to secure the loan. This means
(b) Jurisdiction of organization and State I.D. No. If the
that if you make a statement that isn‟t true, you
Borrower is a corporation, limited liability company,
could be declared in default. If you willfully
made a false statement, you might be liable for
limited partnership or other organization requiring
fraud and misrepresentation.
registration in its jurisdiction of organization (a "Registered
Organization"), the Borrower is duly incorporated or
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