Demand Loan Agreement for Canada

Demand Loan Agreement Template for Canada

A Demand Loan Agreement is a legal document governed by Canadian law that establishes the terms and conditions under which a lender provides a loan that is repayable upon demand to a borrower. This agreement outlines the principal amount, interest calculations, payment terms, and the lender's right to demand repayment at any time without prior notice. The document incorporates provisions compliant with Canadian federal legislation such as the Interest Act and provincial regulations regarding security interests and consumer protection. It includes representations, warranties, and covenants to protect the lender's interests while establishing clear obligations for the borrower.

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What is a Demand Loan Agreement?

The Demand Loan Agreement is a crucial financial instrument used in Canadian lending practices when flexibility in repayment timing is required. This type of agreement is commonly used by financial institutions, private lenders, and businesses for both commercial and personal lending purposes. The document must comply with Canadian federal and provincial regulations, including the Interest Act, Criminal Code provisions on interest rates, and applicable provincial security and consumer protection laws. The agreement's demand nature distinguishes it from term loans, as it allows the lender to require full repayment at any time without a fixed maturity date. This makes it particularly useful for short-term financing needs, bridge financing, or situations where the lender requires additional control over the lending relationship.

What sections should be included in a Demand Loan Agreement?

1. Parties: Identifies and defines the Lender and Borrower

2. Background: Contextual information about the purpose of the loan and the parties' intention

3. Definitions and Interpretation: Defines key terms and sets out interpretation rules

4. The Loan: Principal amount, purpose, and fundamental terms of the loan

5. Interest: Interest rate, calculation method, and payment terms

6. Repayment: Terms of repayment including the demand nature of the loan

7. Payments: Payment mechanics, timing, and allocation of payments

8. Representations and Warranties: Borrower's statements about its legal and financial status

9. Covenants: Ongoing obligations of the Borrower during the term of the loan

10. Events of Default: Circumstances constituting default and consequences

11. Enforcement: Lender's rights and remedies upon default or demand

12. General Provisions: Standard boilerplate clauses including notices, amendments, and governing law

What sections are optional to include in a Demand Loan Agreement?

1. Security: Required if the loan is secured by any assets or property

2. Guarantees: Required if there are any guarantors for the loan

3. Conditions Precedent: Required if there are specific conditions that must be met before the loan is advanced

4. Insurance: Required if specific insurance coverage is required for secured assets

5. Financial Covenants: Required for business borrowers where financial ratios must be maintained

6. Tax Provisions: Required if there are specific tax considerations or withholding requirements

7. Assignment and Participation: Required if the lender wishes to reserve the right to assign or participate the loan

8. Multiple Borrowers: Required if there is more than one borrower, establishing joint and several liability

What schedules should be included in a Demand Loan Agreement?

1. Schedule A - Defined Terms: Detailed definitions of terms used in the agreement

2. Schedule B - Advance Request Form: Standard form for requesting advances under the loan

3. Schedule C - Calculation of Interest: Detailed methodology for interest calculation

4. Schedule D - Security Details: Description of any security being provided for the loan

5. Schedule E - Permitted Liens: List of existing liens or encumbrances that are permitted

6. Schedule F - Compliance Certificate: Form for periodic confirmation of compliance with loan terms

7. Schedule G - Notice Details: Contact information and notice requirements for all parties

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

Canada

Publisher

Genie AI

Document Type

Loan Agreement

Sector

Banking

Cost

Free to use
Relevant legal definitions
Relevant Industries

Banking

Financial Services

Real Estate

Manufacturing

Retail

Technology

Healthcare

Construction

Agriculture

Professional Services

Mining

Energy

Transportation

Hospitality

Relevant Teams

Legal

Finance

Credit

Risk Management

Treasury

Compliance

Commercial Banking

Corporate Finance

Collections

Documentation

Relevant Roles

Chief Financial Officer

Finance Director

Legal Counsel

Corporate Lawyer

Credit Manager

Risk Manager

Loan Officer

Treasury Manager

Financial Controller

Compliance Officer

Commercial Banking Officer

Credit Analyst

Legal Secretary

Banking Relationship Manager

Collections Manager

Industries
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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