Secured Loan Note for Canada

Secured Loan Note Template for Canada

A Secured Loan Note is a legally binding financial instrument used in Canadian jurisdictions that documents a loan agreement where the borrower pledges specific assets as collateral to secure the repayment obligation. This document incorporates essential elements required under Canadian federal and provincial laws, including compliance with the Bank Act and applicable Personal Property Security Act provisions. It details the loan amount, interest terms, repayment schedule, security arrangements, events of default, and enforcement mechanisms, while ensuring adherence to Canadian interest rate regulations and security registration requirements.

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What is a Secured Loan Note?

A Secured Loan Note is essential for financial transactions in Canada where lenders require collateral to secure their loans. This document is commonly used in both commercial and corporate lending scenarios, providing a comprehensive framework for secured lending arrangements. The document must comply with Canadian federal legislation (such as the Bank Act and Interest Act) and provincial security laws (such as the Personal Property Security Act or Civil Code of Quebec). It is particularly important for transactions where specific assets are pledged as security, requiring detailed documentation of the security interest, registration requirements, and enforcement mechanisms. The Secured Loan Note typically includes precise details about the loan amount, interest calculations, payment schedules, events of default, and remedies available to the lender.

What sections should be included in a Secured Loan Note?

1. Parties: Identification of lender and borrower with full legal names and addresses

2. Background: Context of the loan arrangement and purpose

3. Definitions: Defined terms used throughout the document

4. Loan Amount and Purpose: Specification of the principal amount and intended use

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

6. Repayment Terms: Schedule of payments, prepayment provisions, and payment mechanics

7. Security: Description of collateral and security interest being granted

8. Representations and Warranties: Standard declarations by the borrower about their legal and financial status

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

10. Events of Default: Circumstances constituting default and consequences

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

12. Notices: Communication requirements and contact details

13. Governing Law: Specification of Canadian law and jurisdiction

14. Execution: Signature blocks and execution requirements

What sections are optional to include in a Secured Loan Note?

1. Guarantor Provisions: Required when there is a third-party guarantor for the loan

2. Insurance Requirements: Detailed when specific insurance must be maintained on secured assets

3. Assignment and Transfer: Include when the note may be transferred or syndicated

4. Tax Provisions: Required when specific tax considerations need to be addressed

5. Priority Arrangements: Needed when there are multiple secured creditors

6. Currency Provisions: Include when loan or payments involve multiple currencies

7. Registration Rights: Required when security interests need specific registration provisions

8. Subordination Terms: Include when there are subordinated debt arrangements

What schedules should be included in a Secured Loan Note?

1. Schedule A - Payment Schedule: Detailed amortization schedule and payment dates

2. Schedule B - Security Description: Detailed description of all assets serving as collateral

3. Schedule C - Permitted Encumbrances: List of existing liens or encumbrances allowed on the security

4. Schedule D - Form of Compliance Certificate: Template for periodic borrower compliance certification

5. Schedule E - Security Registration Details: PPSA and other registration requirements and details

6. Appendix 1 - Interest Calculation Methods: Detailed explanation of interest calculations and methods

7. Appendix 2 - Form of Transfer/Assignment: Standard form for transferring interests in the note

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

Banking and Financial Services

Commercial Real Estate

Manufacturing

Retail

Technology

Agriculture

Energy

Healthcare

Transportation and Logistics

Construction

Mining and Resources

Professional Services

Relevant Teams

Legal

Finance

Treasury

Risk Management

Compliance

Credit Administration

Corporate Secretariat

Business Development

Loan Operations

Security Administration

Relevant Roles

Chief Financial Officer

Finance Director

Treasury Manager

Corporate Lawyer

Legal Counsel

Credit Manager

Risk Manager

Commercial Lending Officer

Account Manager

Security Registration Specialist

Compliance Officer

Financial Controller

Corporate Secretary

Business Development Manager

Loan Administrator

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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