Loan Agreement Between Two Companies Template for the United States

A Loan Agreement Between Two Companies is a legally binding contract that governs financial transactions when one business entity lends money to another. Under United States law, these agreements must comply with federal regulations including the Truth in Lending Act, Equal Credit Opportunity Act, and relevant provisions of the Uniform Commercial Code, while also adhering to state-specific lending laws and usury restrictions.

When do you need this document?

You need a comprehensive loan agreement whenever your company is lending money to or borrowing from another business entity. This includes situations where you're providing bridge financing to a subsidiary, extending credit to a business partner, or participating in inter-company lending arrangements within a corporate group. The document becomes particularly crucial when the loan amount exceeds $25,000, involves complex repayment terms, or requires security interests in business assets. Without a proper agreement, you risk unclear repayment obligations, disputes over interest calculations, and difficulty enforcing collection rights if the borrower defaults.

Key legal considerations

Your loan agreement must clearly specify the principal amount, interest rate calculations, and repayment schedule to avoid future disputes. Interest rate provisions are particularly important as they must comply with state usury laws, which vary significantly across jurisdictions and can render excessive rates unenforceable. Security and collateral clauses require careful attention under UCC Article 9, as improperly documented security interests may be invalid against third parties or in bankruptcy proceedings. Default provisions should define specific triggering events and remedies, including acceleration clauses, late fees, and collection costs. Consider including personal guarantees from company principals when lending to smaller businesses, but ensure compliance with Fair Credit Reporting Act requirements for credit checks and Equal Credit Opportunity Act non-discrimination provisions.

Legal requirements in United States

Federal law requires compliance with Truth in Lending Act disclosure requirements for certain commercial loans, particularly those to smaller businesses or involving consumer-like transactions. Your agreement must include proper choice of law and jurisdiction clauses, as interstate lending transactions may trigger multiple state law requirements. Documentation must satisfy UCC Article 9 perfection requirements if you're taking security interests in business assets, including proper filing of financing statements with appropriate state authorities. Additionally, loans exceeding certain thresholds may require compliance with Bank Secrecy Act reporting requirements and anti-money laundering procedures. State licensing requirements may apply if your company regularly engages in commercial lending activities, and some states require specific contractual language for enforceability of certain clauses like confession of judgment or waiver of jury trial provisions.