This Loan Note is a form of legally binding financing whereby the borrower issues a document (the loan note) to the lender (note holder) evidencing that money has been borrowed and the terms and conditions of this borrowing as well as stating the borrower’s obligation to re-pay the notes at a future specified date or dates.
Loan Notes can offer an attractive form of raising finance for SME businesses and clubs or associations, because:
• Several loan notes of small denominations can be issued;
• Money can be raised on a short term basis; and
• It enables clubs, societies or associations with large membership bases with members willing to invest small amounts each, to raise finance.
This loan note has been drafted as an unsecured obligation of a private limited company. The loan note carries interest and the terms of both interest payments and final redemption details are set out. It is not transferable.
This loan note is designed as a simple straightforward template borrowing mechanism and is presented as a certificate with conditions attached. The loan note is executed as a deed (therefore signatures must be witnessed). The terms and conditions of the loan note should be written and agreed by both parties. As with all financing arrangements, breach of a term can have serious consequences. Events of default have been including in this loan note instrument.
Loan notes can be extremely complex documents, particularly if amongst other things, they are secured and the issuer is a bank. There can also be complex tax implications to loan note arrangements. It is strongly advised to seek independent legal and tax advice if any of these situations is relevant.
The clauses in this loan note include:
• Loan Note Certificate
• Definitions & Interpretation
• Redemption & Cancellation
• Events of Default
• Registration of Noteholders
• Lost Certificates
• Noteholders’ Information
• Governing law & jurisdiction
This Loan Note is in open format. Either enter the requisite details in the highlighted fields or adjust the wording to suit your purposes. Should you require a loan note with fewer provisions, then you are advised to download the basic version loan note.
Once you have purchased access to the appropriate document folder click on the “Download Document” button below. You will be asked what you want to do with the file. It is recommended that you save the document to a location of your choice prior to viewing.