Simple Loan Agreement Template for the United States

A Simple Loan Agreement is your legal foundation for documenting any monetary lending arrangement in the United States. Whether you're lending money to a family member, friend, or business associate, this contract ensures both parties understand their obligations and protections under federal and state law. The agreement creates enforceable terms that can be upheld in court if disputes arise.

When do you need this document?

You need a Simple Loan Agreement whenever money changes hands with an expectation of repayment. This includes personal loans between family members or friends, small business loans, bridge financing for real estate purchases, or emergency funding arrangements. Even informal lending situations benefit from written documentation, as verbal agreements often lead to misunderstandings about repayment terms, interest rates, and consequences of default. The agreement also provides tax documentation for both parties and creates a clear legal record that protects against claims of gift transactions.

Key legal considerations

Your loan agreement must comply with federal lending regulations, particularly the Truth in Lending Act, which requires clear disclosure of all credit terms including the Annual Percentage Rate. Interest rates cannot exceed state usury law limits, which vary by jurisdiction but typically range from 6% to 36% annually. Default provisions should be reasonable and enforceable, avoiding penalty clauses that courts might consider unconscionable. Consider including guarantor provisions for additional security, acceleration clauses that make the full balance due upon default, and specific payment methods to avoid disputes. The agreement should also address what happens if the borrower dies or becomes incapacitated before repayment.

Legal requirements in United States

Federal law requires compliance with the Equal Credit Opportunity Act, prohibiting discrimination based on race, religion, sex, marital status, or age. Consumer loans must follow Truth in Lending Act disclosure requirements, including clear statement of finance charges and payment schedules. State laws govern maximum interest rates, with many states requiring written agreements for loans exceeding specific amounts or durations. Some states mandate specific language for acceleration clauses or require notarization for loans above certain thresholds. The Fair Credit Reporting Act applies if you plan to report payment history to credit agencies. Documentation must be clear and unambiguous to be enforceable, with all material terms explicitly stated rather than implied.