Directors’ Long Form Loan Agreement – Loan to Company

This Directors’ Loan Agreement - Loan to Company is designed for the common scenario where a director lends money to their own company. It is a fuller, more protective form of agreement than the basic form, and is intended for situations where the parties want the key terms and protections documented in a more comprehensive way.

Why Companies Use Director Funding

Where funds allow, a company may prefer to borrow from one of its directors, particularly if external funding is not available or where borrowing from a director is cheaper or more convenient than third party finance.

Key Issues To Consider

A director can lend to a company on commercial terms, but the parties should consider potential conflicts of interest and, where relevant, whether any security is being taken. The Guidance Note - Loans Involving Directors should be read alongside this agreement.

What This Template Covers

The agreement covers the facility and purpose, drawdown and conditions precedent, interest and repayments, payment mechanics and VAT, security (where used), representations and warranties, covenants, events of default, assignment and transfer, set-off, remedies and waivers, communications, and governing law and jurisdiction. It also includes a repayment schedule (Schedule 1), a drawdown notice (Schedule 2), and security documents (Schedule 3).

Flexibility And Recent Update

Directors may choose to lend on less restrictive terms than some of the provisions in this agreement. Optional clauses are included in square brackets and can be removed if not required. The template has also been updated and modernised, including the addition of a drawdown notice (Schedule 2) to provide a clear mechanism for requesting when the loan is to be advanced and which account the funds should be paid into.

Basic Form Alternative

If the loan relationship does not require this level of detail or protection, consider using Directors’ Loan Agreement to Company - Basic Form instead.

Consumer Credit Act Point

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.