Private Lending Term Sheet Template for the United Arab Emirates

A Private Lending Term Sheet is a crucial preliminary document that outlines the key commercial terms of a loan arrangement before drafting the full loan agreement. In the United Arab Emirates, this document serves as your roadmap for structuring private lending transactions while ensuring compliance with local laws and regulations. Whether you're an individual or corporate lender, this template helps establish clear expectations and protects your interests from the outset of any lending relationship.

When do you need this document?

You need a Private Lending Term Sheet whenever you're considering entering into a private loan arrangement in the UAE. This includes situations where traditional banking facilities are not suitable or available, such as bridge financing for property transactions, working capital loans between related companies, or personal loans with customized terms. Corporate borrowers often use term sheets when seeking alternative financing sources, while high-net-worth individuals may require them for sophisticated lending arrangements. The document is particularly valuable in Islamic finance transactions where Sharia compliance must be clearly documented from the preliminary stages.

Key legal considerations

Your term sheet must clearly identify all parties with their full legal names and UAE addresses, as required under the Civil Code. The document should specify the loan amount, purpose, interest rate calculation method, and repayment schedule to avoid future disputes. Security provisions require careful consideration, particularly when involving real estate or corporate guarantees, as these must comply with UAE property and commercial laws. If you're structuring an Islamic finance arrangement, ensure the term sheet reflects Sharia-compliant structures such as Murabaha or Ijara, and consider involving a qualified Sharia advisor. Interest rate caps and usury provisions under UAE law must be respected, and any fees charged should be clearly documented and legally permissible.

Legal requirements in United Arab Emirates

Under UAE Federal Law No. 5 of 1985 (Civil Code), your lending arrangement must comply with general contract law principles including offer, acceptance, and lawful consideration. The UAE Federal Law No. 18 of 1993 (Commercial Code) may apply if the loan has commercial purposes, requiring additional disclosures and formalities. If you're not a licensed financial institution, ensure your lending activities don't trigger regulatory requirements under UAE Federal Law No. 14 of 2018 (Central Bank Law). Electronic execution requires compliance with UAE Federal Law No. 11 of 2018 (Electronic Commerce Law) for digital signatures and documentation. For corporate parties, the Commercial Companies Law may impose additional requirements on lending between related entities or require board approvals for significant transactions. Consider engaging local legal counsel to ensure full regulatory compliance and proper documentation structure.