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Loan Guarantee Form

Loan Guarantee Form Template for Canada

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Key Requirements PROMPT example:

Loan Guarantee Form

I need a Loan Guarantee Form for a corporate guarantor (parent company) guaranteeing a CAD 5 million business loan to its subsidiary, with the guarantee being limited to 120% of the principal amount and including specific financial covenants.

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Document background
The Loan Guarantee Form is a crucial legal instrument in Canadian lending practices, used when a third party agrees to guarantee the repayment of a loan or other financial obligation. This document is essential in situations where additional security is required for a loan, such as in commercial lending, corporate financing, or when individuals with limited credit history require financial assistance. The form must comply with Canadian federal banking regulations and provincial laws, including the Bank Act, provincial guarantee acknowledgment acts, and consumer protection legislation. The Loan Guarantee Form typically includes detailed provisions about the scope of the guarantee, enforcement mechanisms, rights of the guarantor, and procedures for claiming under the guarantee. It is particularly important in business relationships where parent companies guarantee subsidiaries' obligations, in real estate transactions, and in situations where personal guarantees are required for business loans.
Suggested Sections

1. Parties: Identification of the Guarantor, Lender (Creditor), and Borrower (Principal Debtor)

2. Background: Context of the guarantee, including details of the underlying loan agreement and the relationship between the parties

3. Definitions: Key terms used throughout the guarantee agreement, including 'Guaranteed Obligations', 'Events of Default', and 'Security'

4. Guarantee: Core provision stating the guarantee obligation, amount, and scope of the guarantee

5. Nature of Guarantee: Specification that this is a continuing guarantee and details about whether it is limited or unlimited

6. Payment Terms: Terms and conditions for payment under the guarantee, including timing and method of payment

7. Representations and Warranties: Guarantor's confirmations regarding their legal capacity, authority, and financial condition

8. Enforcement: Lender's rights and remedies upon default, including acceleration and realization of security

9. Preservation of Rights: Lender's right to modify the underlying loan without affecting the guarantee

10. Governing Law and Jurisdiction: Specification of applicable Canadian law and jurisdiction for disputes

Optional Sections

1. Security: Details of any collateral or security provided to support the guarantee, used when the guarantee is secured

2. Independent Legal Advice: Confirmation that the guarantor has received independent legal advice, recommended for individual guarantors

3. Financial Covenants: Specific financial requirements for corporate guarantors, used for business guarantees

4. Multiple Guarantors: Provisions dealing with joint and several liability, used when there is more than one guarantor

5. Guarantee Limitations: Specific caps or limitations on the guarantee amount, used for limited guarantees

6. Currency Provisions: Provisions dealing with multiple currencies, used for international transactions

7. Tax Gross-Up: Provisions dealing with tax implications, used when tax considerations are relevant

Suggested Schedules

1. Schedule A - Underlying Loan Agreement: Copy or summary of the main loan agreement being guaranteed

2. Schedule B - Guaranteed Obligations: Detailed description of the obligations covered by the guarantee

3. Schedule C - Security Details: Description of any security or collateral provided (if applicable)

4. Schedule D - Guarantee Certificate: Form of certificate confirming the guarantee amount and terms

5. Appendix 1 - Notice Details: Contact information and notice requirements for all parties

6. Appendix 2 - Independent Legal Advice Certificate: Certificate from legal counsel confirming advice given to guarantor

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

Linkedin in social icon imageX social icon image
alex.den.21@genieai.co
Relevant legal definitions
Agreement
Applicable Law
Banking Day
Borrower
Business Day
Collateral
Default
Default Rate
Enforcement Action
Event of Default
Facility Agreement
Financial Indebtedness
Guaranteed Obligations
Guarantor
Interest Rate
Lender
Loan Agreement
Material Adverse Effect
Parties
Payment Date
Principal
Principal Debtor
Secured Obligations
Security
Security Interest
Term
Underlying Obligation
Written Notice
Credit Agreement
Guarantee Amount
Guarantee Period
Permitted Security
Related Rights
Discharge Date
Maximum Liability
Guaranteed Liabilities
Enforcement Notice
Demand Notice
Recovery
Relevant Documents
Clauses
Guarantee Obligation
Payment
Indemnity
Continuing Security
Principal Debtor
Waiver
Reinstatement
Representations and Warranties
Covenants
Default
Enforcement
Set-off
Currency
Assignment
Amendments
Notices
Severability
Governing Law
Jurisdiction
Limitation Period
Independent Legal Advice
Execution
Counterparts
Entire Agreement
Time of Essence
Joint and Several Liability
Limitation of Liability
Security Interest
Remedies
Subrogation
Discharge
Release
Interest
Costs and Expenses
Tax Gross-up
Financial Covenants
Information Undertakings
Relevant Industries

Banking and Financial Services

Real Estate

Commercial Lending

Corporate Finance

Construction

Manufacturing

Retail

Agriculture

Small Business

Professional Services

Relevant Teams

Legal

Finance

Risk Management

Credit

Compliance

Treasury

Commercial Lending

Corporate Banking

Business Development

Operations

Relevant Roles

Chief Financial Officer

Finance Director

Credit Manager

Risk Management Officer

Commercial Lending Officer

Legal Counsel

Corporate Lawyer

Banking Relationship Manager

Compliance Officer

Treasury Manager

Financial Controller

Credit Analyst

Loan Officer

Business Development Manager

Company Secretary

Industries
Bank Act (S.C. 1991, c. 46): Federal legislation governing banking operations and financial services in Canada, including regulations on lending practices and security interests
Interest Act (R.S.C., 1985, c. I-15): Federal law that regulates interest rates and disclosure requirements for loans and financial transactions
Personal Property Security Act (Provincial): Provincial legislation governing the creation and enforcement of security interests in personal property, relevant for securing guarantees
Statute of Frauds (Provincial): Provincial legislation requiring certain contracts, including guarantees, to be in writing and signed to be enforceable
Guarantees Acknowledgment Act (Alberta): Provincial legislation (example from Alberta) requiring specific formalities for personal guarantees to be valid
Consumer Protection Act (Provincial): Provincial legislation protecting consumer rights in financial transactions, including requirements for disclosure and fair practices
Limitations Act (Provincial): Provincial legislation setting time limits for bringing legal actions related to guarantees and debt collection
Fraudulent Conveyances Act (Provincial): Provincial legislation preventing the transfer of assets to avoid obligations under guarantees
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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