Intercompany Revolving Loan Agreement Template for the United States

An Intercompany Revolving Loan Agreement creates a formal lending arrangement between related companies operating under the same corporate umbrella. Unlike traditional term loans, this revolving facility allows you to borrow, repay, and re-borrow funds multiple times up to a specified credit limit, providing maximum flexibility for your corporate group's cash management needs.

When do you need this document?

You'll need this agreement when establishing internal financing between parent companies and subsidiaries, sister companies, or other affiliated entities. This document becomes essential when your corporate structure requires regular cash transfers to support operations, fund expansion projects, or manage temporary liquidity shortfalls. Many multinational corporations use these agreements to centralize treasury functions and optimize working capital across different jurisdictions. The revolving nature makes it particularly valuable for businesses with seasonal cash flow patterns or those requiring ongoing access to flexible funding arrangements.

Key legal considerations

Your agreement must carefully address several critical elements to ensure enforceability and compliance. Interest rate provisions should reflect arm's length terms to satisfy transfer pricing requirements and avoid tax penalties under IRC Section 482. Include clear default provisions, security arrangements if applicable, and detailed drawdown procedures to protect both lender and borrower interests. Consider subordination clauses if external debt exists, as these can affect creditor rights and bankruptcy proceedings. Documentation requirements should specify how loan requests are made, approved, and recorded to maintain proper corporate records. The agreement should also address currency considerations for international transactions and include appropriate governing law and dispute resolution clauses.

Legal requirements in United States

Under United States law, your intercompany loan agreement must comply with multiple regulatory frameworks depending on your corporate structure and public company status. Federal transfer pricing regulations under IRC Section 482 require that interest rates and terms reflect market conditions between unrelated parties. State usury laws may cap maximum permissible interest rates, varying significantly by jurisdiction. If either party is publicly traded, Securities Exchange Act disclosure requirements may apply for material agreements. The Dodd-Frank Act imposes additional compliance obligations on financial institutions involved in lending activities. For consumer-related entities, Truth in Lending Act provisions may require specific disclosures. Tax considerations under IRC Section 7872 address below-market loans and imputed interest calculations. Sarbanes-Oxley requirements mandate proper internal controls and documentation for public companies. Additionally, ensure compliance with state corporate law requirements for related party transactions, which may require board approval or shareholder consent depending on transaction size and corporate governance provisions.