Term Loan Credit Agreement for Canada

Term Loan Credit Agreement Template for Canada

A comprehensive legal agreement governed by Canadian law that establishes the terms and conditions for a term loan facility between a lender and borrower. The document details the loan amount, interest rates, repayment terms, conditions precedent, representations and warranties, covenants, and events of default. It incorporates specific Canadian legal requirements, including compliance with the Bank Act, Interest Act, and applicable provincial laws. The agreement provides security mechanisms, enforcement rights, and includes provisions for both federal and provincial regulatory compliance.

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What is a Term Loan Credit Agreement?

The Term Loan Credit Agreement is a fundamental financing document used when a borrower requires a fixed-term loan facility with specified repayment terms. This agreement, governed by Canadian law, is essential for both commercial and corporate lending transactions where funds are disbursed in a lump sum or in tranches. It contains comprehensive provisions addressing loan mechanics, security arrangements, representations, warranties, and covenants specific to Canadian federal and provincial requirements. The document is structured to comply with Canadian banking regulations, including the Bank Act and provincial security legislation, while providing clear mechanisms for enforcement and remedies. It's particularly relevant for transactions requiring detailed financial covenants, security arrangements, and specific purpose financing such as acquisitions, capital expenditure, or business expansion.

What sections should be included in a Term Loan Credit Agreement?

1. Parties: Identifies the lender(s), borrower(s), and any guarantors

2. Background: Recitals explaining the context and purpose of the loan

3. Definitions and Interpretation: Comprehensive definitions of terms used in the agreement and interpretation rules

4. The Facility: Details of the loan amount, purpose, and availability

5. Conditions Precedent: Conditions that must be satisfied before drawdown

6. Drawdown: Mechanics and process for drawing down the loan

7. Interest and Fees: Interest rates, calculation methods, and all applicable fees

8. Repayment and Prepayment: Repayment schedule, prepayment terms, and related provisions

9. Representations and Warranties: Borrower's representations about its legal and financial status

10. Covenants: Positive and negative undertakings by the borrower

11. Events of Default: Circumstances constituting default and consequences

12. Changes to Parties: Assignment and transfer provisions

13. Administration: Payment mechanics, calculations, and notices

14. Governing Law and Enforcement: Choice of law and jurisdiction provisions

15. Boilerplate: Standard provisions including severability, amendments, and counterparts

What sections are optional to include in a Term Loan Credit Agreement?

1. Security: Required if the loan is secured - details of security arrangements

2. Guarantees: Required if there are guarantors - terms of guarantee

3. Agent and Security Trustee: Required for syndicated loans - role and powers of the agent

4. Increased Costs and Tax Gross-Up: Used in larger commercial loans - provisions for regulatory changes and tax implications

5. Market Disruption: Used when floating rates are involved - provisions for market disruption events

6. Multi-Currency Provisions: Required if multiple currencies are involved

7. Subordination: Required if there are multiple creditors with different priorities

8. Environmental Compliance: Required for loans to industries with environmental impacts

9. Anti-Corruption and Sanctions: Detailed provisions for cross-border or high-risk transactions

What schedules should be included in a Term Loan Credit Agreement?

1. Conditions Precedent: Detailed list of required documents and conditions

2. Form of Drawdown Request: Template for borrower to request loan disbursement

3. Repayment Schedule: Detailed amortization schedule if applicable

4. Form of Transfer Certificate: Template for transferring loan participations

5. Financial Covenants: Detailed financial ratios and calculations

6. Security Documents: Forms of security documents if applicable

7. Permitted Security: List of pre-approved security interests

8. Form of Compliance Certificate: Template for periodic compliance certification

9. Notice Details: Contact information for all parties

10. Existing Financial Indebtedness: List of borrower's existing debt obligations

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
Clauses
Relevant Industries

Banking

Financial Services

Real Estate

Manufacturing

Energy

Infrastructure

Technology

Healthcare

Retail

Agriculture

Mining

Transportation

Telecommunications

Construction

Professional Services

Relevant Teams

Legal

Finance

Treasury

Risk Management

Compliance

Credit

Corporate Secretariat

Banking Operations

Investment

Relationship Management

Relevant Roles

Chief Financial Officer

Finance Director

Treasury Manager

Corporate Lawyer

Legal Counsel

Risk Manager

Credit Manager

Relationship Manager

Compliance Officer

Financial Controller

Corporate Secretary

Investment Manager

Account Manager

Banking Officer

Credit Analyst

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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