Loan Agreement Template

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All states | 6 types
Updated Jun 26, 2026
~ 5 pages
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A loan agreement is a legal contract between a lender and a borrower that sets out the terms under which money is borrowed and repaid. It is used to define the loan amount, repayment schedule, interest rate, and the rights and obligations of both parties.
Loan Agreement Page 1
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Written by Karyna Pukaniuk - Reviewed by Kate Adkham, LLB

Template Types

Shareholder Loan Agreement
This contract details the specifics of a loan between a company and a shareholder.
Payment (Plan) Agreement
This document outlines the schedule for payments to be made to fulfill a debt.
Personal Loan Agreement
This form is necessary whenever a loan is given from one individual to another.
Loan Personal Guarantee Form
This form represents the guarantor's promise, pledging their assurance to satisfy a debt.
Family Loan Agreement
This agreement documents the amount borrowed and repayment terms between the parties.

What Is a Loan Agreement?

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A loan agreement is a written contract that documents the terms of a loan between a lender and a borrower. It typically includes details such as the loan amount, repayment schedule, interest rate, and any conditions that apply to the loan.

The purpose of a loan agreement template is to create a clear record of the arrangement and establish each party's rights and responsibilities. Whether the loan is for personal, business, or family purposes, putting the terms in writing can help prevent misunderstandings and provide guidance if a dispute arises.

When to Use a Loan Agreement

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You can use a loan contract when:

  • Lending money to a friend or family member — to avoid confusion and keep the agreement clear.

  • Borrowing money from someone you know — to show you're serious about paying it back.

  • Giving or getting a loan for a business — to outline terms like interest and payment schedule.

  • Buying something expensive with a payment plan — like a car, equipment, or electronics.

  • Charging interest on a personal loan — to make it legally binding and fair.

  • Protecting yourself legally — in case of missed payments or disputes.

Parties to the Loan Agreement

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Every loan contract template must clearly identify the parties involved in the transaction. Accurate information helps establish who is responsible for providing the funds and who is obligated to repay them.

  1. Lender — The individual, business, financial institution, or other entity that provides the loan funds to the borrower.

  2. Borrower — The individual or organization that receives the loan and agrees to repay it according to the terms of the agreement.

  3. Guarantor (if applicable) — A third party who agrees to repay the loan if the borrower fails to meet their repayment obligations.

Key Components of a Loan Agreement

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A loan document template typically includes the following sections to define the terms of the loan and protect the interests of both parties:

  • Parties to the Agreement — Identifies the lender and borrower and establishes who is responsible for providing and repaying the loan.

  • Loan Amount and Interest Rate — Specifies the principal amount being borrowed and any interest charged on the loan.

  • Repayment Terms — Explains when payments are due, how they will be made, and the loan's maturity date.

  • Collateral (Security) — Describes any assets pledged by the borrower to secure the loan and protect the lender in case of default.

  • Default and Late Payment Provisions — Defines what happens if the borrower misses payments or otherwise fails to comply with the agreement.

  • Governing Law and Dispute Resolution — States which state's laws apply to the agreement and how disputes will be handled.

  • Signatures and Effective Date — Confirms when the agreement takes effect and shows that both parties have accepted its terms.

Key Terms of the Loan Agreement

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  1. Principal Amount: The original amount of money borrowed before interest or fees are added.

  2. Interest Rate: The percentage charged by the lender for borrowing the money.

  3. Maturity Date: The date by which the loan must be fully repaid.

  4. Borrower: The person or entity receiving the loan and agreeing to repay it.

  5. Lender: The person or entity providing the loan funds.

  6. Collateral (Security): Property or assets pledged to secure the loan and protect the lender if the borrower defaults.

  7. Default: A failure to meet the obligations of the loan agreement, such as missing a payment.

  8. Late Fee: An additional charge imposed when a payment is not made by the required due date.

  9. Prepayment: The repayment of all or part of the loan before the scheduled maturity date.

  10. Guarantor: A third party who agrees to repay the loan if the borrower cannot meet their repayment obligations.

How to Fill Out a Loan Agreement

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You can complete a loan agreement form manually or use Loio's interactive interview system to simplify the process. The system guides you through the document by asking a series of questions about the loan, the parties involved, repayment terms, and other key details. Once you provide your answers, the information is automatically added to the agreement. After the document is completed, both parties can sign it electronically using Loio Sign, which is especially useful when the lender and borrower are in different locations and want to save time on printing and mailing paperwork.

If you would like more information about each section of the basic loan agreement before filling it out, review the instructions below.

  1. Enter the Effective Date of the agreement.

  2. Provide the Lender's information, including their full legal name and address.

  3. Provide the Borrower's information, including their full legal name and address.

  4. Enter the loan amount that the lender agrees to provide.

  5. Specify the interest rate if interest will be charged on the loan.

  6. Enter the repayment date by which the borrower must repay the loan in full.

  7. Add any repayment details, including early repayment rights and late payment fees.

  8. Describe any collateral that will secure the loan, if applicable.

  9. Review the default provisions and confirm the consequences of missed payments or other breaches of the agreement.

  10. Enter the notice and governing law information, including the parties' contact details and the state whose laws will govern the agreement.

  11. Carefully review all terms to ensure the information is accurate and complete.

  12. Sign the money loan contract. The lender and borrower should sign and date the document and keep copies for their records.

Before signing a loan agreement contract, both parties should review applicable state laws regarding interest rates, lending practices, and contract enforceability. Many states impose usury limits that restrict the maximum interest rate a lender may charge. Borrowers may also wish to verify that their financial institution is federally insured through the Federal Deposit Insurance Corporation (FDIC). 

Promissory Note vs. Loan Agreement

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A promissory note and a loan agreement are both used to document borrowed money, but they differ in complexity. 

  • A promissory note is a simpler document that contains the borrower's promise to repay a specific amount of money under agreed terms. It is commonly used for straightforward loans between individuals or family members.

  • A loan agreement is more detailed and includes additional provisions beyond repayment terms. It may address interest, collateral, default remedies, dispute resolution, borrower obligations, and other legal protections. Loan agreements are often preferred for larger loans, business transactions, or situations where the parties want more comprehensive documentation of their rights and responsibilities.

Should I Charge Interest in a Loan Agreement?

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Whether to charge interest depends on the relationship between the parties and the purpose of the loan. Commercial lenders and businesses typically charge interest as compensation for the risk of lending money, while loans between friends or family members are sometimes interest-free.

When deciding whether to charge interest, consider:

  • The amount of money being borrowed;

  • The repayment period;

  • The level of risk involved;

  • The relationship between the lender and borrower;

  • Applicable state usury laws.

If interest will be charged, the rate should be clearly stated in the contract for loaning money and comply with applicable state usury limits. You can review consumer lending information through the Consumer Financial Protection Bureau (CFPB).

How to Determine a Fair Interest Rate

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A fair interest rate should reflect the circumstances of the loan while remaining compliant with applicable state laws. Many lenders look at current market rates and the borrower's ability to repay before deciding on a rate.

Factors that may influence the interest rate include:

  • Current market interest rates;

  • The borrower's creditworthiness;

  • The loan amount;

  • The repayment term;

  • Whether the loan is secured by collateral;

  • The level of risk assumed by the lender.

For loans between family members or friends, the parties often choose a lower rate than a traditional financial institution would charge.

Sources

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