Revolving Line Of Credit Promissory Note for Canada

Revolving Line Of Credit Promissory Note Template for Canada

A Canadian law-governed Revolving Line of Credit Promissory Note is a legal instrument that establishes a renewable credit facility between a lender and borrower. This document outlines the terms under which the borrower can repeatedly draw funds up to a specified credit limit, repay them, and borrow again, while maintaining a promise to repay the outstanding balance with interest. The document incorporates essential elements required under Canadian federal and provincial legislation, including the Bills of Exchange Act and relevant banking regulations, specifying interest calculation methods, payment terms, default provisions, and remedies available to the lender.

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What is a Revolving Line Of Credit Promissory Note?

The Revolving Line of Credit Promissory Note is commonly used in Canadian business and personal lending transactions where flexible, recurring access to credit is required. This document combines the legal characteristics of a promissory note with the functionality of a revolving credit facility, allowing borrowers to draw down funds as needed up to a predetermined limit, repay them, and borrow again during the term of the agreement. It's particularly useful for businesses managing working capital needs or individuals requiring ongoing access to credit. The document must comply with Canadian federal legislation, including the Bank Act and Bills of Exchange Act, as well as provincial laws governing secured transactions and consumer protection where applicable. Key components include the credit limit, interest rates, payment terms, default provisions, and any security arrangements.

What sections should be included in a Revolving Line Of Credit Promissory Note?

1. Parties: Identification of the Lender and Borrower with full legal names and addresses

2. Promise to Pay: Explicit unconditional promise by the Borrower to pay the Lender, including the maximum credit limit

3. Definitions: Key terms used throughout the document including 'Credit Limit', 'Interest Rate', 'Payment Date', etc.

4. Credit Facility Terms: Details of the revolving nature of the credit facility, including draw-down rights and repayment provisions

5. Interest Rate: Specification of interest rate(s), calculation method, and compounding periods

6. Payments: Payment terms, including minimum payments, payment dates, and application of payments

7. Representations and Warranties: Basic representations by the Borrower regarding legal capacity and authority

8. Events of Default: Circumstances constituting default and consequences thereof

9. Remedies: Lender's rights and remedies upon default

10. Governing Law: Specification of Canadian law as governing law and jurisdiction

What sections are optional to include in a Revolving Line Of Credit Promissory Note?

1. Security Interest: Include when the credit line is secured by collateral, describing the security interest and registration requirements

2. Guaranty: Include when there are personal or corporate guarantors for the credit facility

3. Insurance Requirements: Include when the lender requires specific insurance coverage on collateral or the borrower

4. Financial Covenants: Include for business borrowers when specific financial metrics must be maintained

5. Notice Provisions: Include when specific notice requirements for draws or payments are required

6. Prepayment Terms: Include when there are specific provisions or penalties for early repayment

7. Cross-Default: Include when default under other agreements triggers default under this note

What schedules should be included in a Revolving Line Of Credit Promissory Note?

1. Schedule A - Draw Procedures: Detailed procedures for requesting and processing draws under the credit facility

2. Schedule B - Calculation of Interest: Detailed methodology for interest calculation and examples

3. Schedule C - Payment Schedule: Template for recording draws, payments, and running balance

4. Schedule D - Security Agreement: If secured, details of collateral and security interest

5. Schedule E - Compliance Certificate: Form for periodic certification of compliance with note terms

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

Promissory Note

Sector

Banking

Cost

Free to use
Relevant legal definitions
Relevant Industries

Financial Services

Banking

Commercial Lending

Small Business

Real Estate

Manufacturing

Retail

Construction

Technology

Professional Services

Healthcare

Agriculture

Relevant Teams

Legal

Finance

Treasury

Credit and Risk

Compliance

Commercial Lending

Corporate Banking

Business Development

Operations

Relevant Roles

Chief Financial Officer

Finance Director

Treasury Manager

Credit Manager

Financial Controller

Legal Counsel

Corporate Secretary

Risk Manager

Commercial Lending Officer

Credit Analyst

Compliance Officer

Account Manager

Business Development Manager

Financial Advisor

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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