Directors’ Long Form Loan Agreement – Loan to Company

This Directors’ Loan Agreement – Loan to Company is a loan agreement specifically designed for a director making a loan to the company that he or she is a director of.

Funds permitting, companies may prefer to borrow from their own directors, particularly if they cannot access funding from elsewhere or because the loan may be cheaper and more convenient than external third party funding.

Use this agreement for a director loan to the company

Directors may make loans to companies on the same basis as any commercial organisation.

However there will be issues regarding the taking of security and conflicts of interest that must be considered before entering into the loan.

Our Guidance Note – Loans Involving Directors should be read in conjunction with this agreement.

Alternative shorter template

If the loan relationship you seek to achieve does not require this much detail or protection, you may choose to use the alternative Directors’ Loan Agreement to Company – Basic Form.

What the agreement covers

This Directors’ Loan Agreement is a more detailed form and includes provisions dealing with:

• the loan facility, purpose and drawdown (including a drawdown notice);
• interest, repayments and payments (including a repayment schedule);
• security (where relevant) and related security documents;
• representations and warranties, covenants and events of default; and
• assignment, transfer, set-off and other standard contractual provisions.

Schedule 1: Repayment Schedule

Schedule 2: Drawdown Notice

Schedule 3: [Security Documents]

Directors lending to companies may choose to lend on less restrictive terms than some of these clauses.

Template updates and Consumer Credit Act position

This template has been updated to refresh and modernise it as well as including a drawdown notice in Schedule 2.

This has been included to establish a clear mechanism for requesting when the loan is to be advanced and into which account the funds should be deposited.

NOTE: This Agreement is not intended to be regulated by the Consumer Credit Act 1974.

Directors’ Long Form Loan Agreement – Loan to Company is part of Corporate. Just £38.50 + VAT provides unlimited downloads from Corporate for 1 year.