Business To Business Loan Agreement Template for England and Wales

A commercial loan agreement, often called a business-to-business (B2B) loan agreement, is a legally binding contract that governs lending arrangements between business entities in England and Wales. The document sets out the terms on which one business provides financing to another, with detailed provisions for loan disbursement, the repayment schedule, interest calculations and security arrangements. Commercial lending between businesses sits under different rules to consumer credit and usually involves more complex commercial considerations, so the agreement needs to be precise about who owes what, by when, and on what terms and conditions.

What is a commercial loan agreement?

A commercial loan agreement records a loan between two businesses and the terms and conditions that govern it. At a minimum it names the lender and the borrower, states the principal amount, sets the interest rate and the method of calculation, fixes the repayment schedule, and describes any security or guarantees. It also defines what counts as default and what happens next. A well-drafted agreement protects both sides: the party lending has a clear route to recover the money, and the business receiving the funds knows exactly what is expected.

When do you need this document?

You need a commercial loan agreement whenever your company lends money to, or borrows from, another business. Common situations include providing working capital to a subsidiary, financing a business acquisition, or extending credit to a strategic partner. It applies to inter-company loans, supply chain financing, and directors lending personal funds to their companies. It is also used for asset-based lending and for bridge financing on commercial property transactions, as well as alternatives to traditional bank finance where speed matters. It also fits project-based sectors such as construction, where one business funds a contractor or supplier ahead of completion. Whenever the amount, parties or purpose change, a fresh written agreement keeps the record accurate.

What should a business loan agreement include?

The core terms and conditions of a business loan agreement usually cover the following.

• Parties and loan amount. The full legal names of each side and the exact principal advanced.
• Interest. The rate, whether it is fixed or variable, how it is calculated, and any default charge on overdue sums.
• Fees and charges. Arrangement fees, commitment fees and any costs reimbursed, stated as a number or a percentage so there is no ambiguity.
• Repayment schedule. Instalment dates and amounts, or a single bullet repayment, plus any early repayment terms.
• Security and guarantees. Personal guarantees, corporate guarantees, and charges over business assets, often described as a security loan where the debt is backed by property or stock.
• Representations and covenants. Financial covenants and ongoing obligations the business receiving the funds must meet.
• Events of default. What triggers default, including missed payments, cross-default and material adverse change.
• Enforcement. Acceleration of repayment and the remedies available to the party that lent the money.

What is the difference between a secured and an unsecured loan agreement?

A security loan is backed by a charge over assets or a guarantee, so the lender can recover value if repayment fails. An unsecured loan relies on the promise to repay and the covenants in the contract alone. The table sets out the practical difference.

Key legal considerations

Several legal elements need attention. A director's authority to enter into the loan must be established under the Companies Act 2006, with board resolutions and compliance with the company's articles of association. Interest, fees and payment terms should be clearly defined to avoid disputes, particularly around compound interest and default rates. Security arrangements, such as guarantees and charges over business assets, should be documented and registered where needed. Tax treatment matters too, because interest payments and withholding can affect both sides, so set out how interest is reported and paid. Events of default should be set out in full, covering financial covenants, cross-default provisions and material adverse change clauses. The agreement should also deal with acceleration of repayment and the rights of any guarantors and security trustees.

Legal requirements in England and Wales

Commercial loan agreements in England and Wales must meet several statutory requirements. The Companies Act 2006 governs a company's authority to enter into the loan, needing proper board authorisation and compliance with directors' duties. Where security is given, charges must be registered at Companies House within 21 days. A Companies House search on the borrowing business confirms its registered details and any existing charges. The Financial Services and Markets Act 2000 may apply if the lender needs authorisation for regulated lending. While the Consumer Credit Act 1974 mainly covers consumer loans, some provisions can reach small business borrowers. The Law of Property Act 1925 governs loans secured against real property and the formalities for creating and registering charges. Common law contract principles apply throughout, so the agreement must meet the tests for offer, acceptance, consideration and intention to create legal relations.

Do I need a solicitor or law firm to put one in place?

For straightforward commercial lending, people in commercial and finance roles can agree terms and sign without routing the deal through a solicitor or law firm. The starting point is a template that already contains the standard terms and conditions, with the figures and security tailored to the deal. For larger secured facilities or multi-party guarantees, GenieAI reviews the drafted terms against your playbook and flags anything out of line before signature, so you get that check without the cost and delay of outside advice.

How do I create one?

Start from a template that already contains the standard terms and conditions, then fill in the specifics of your deal: the amount, the interest rate, the fees, the repayment schedule, and any security. Check that the person signing on each side has authority to do so, and confirm the details of the other business through standard due diligence and a Companies House search. GenieAI reviews the drafted terms against your playbook and flags anything out of line before signature, so you can agree with confidence. You can browse the wider template library for related commercial documents.

Review and support

Once the figures are set, review each clause against your position: does the interest rate reflect the risk, are the events of default clear, and does the security match the amount lent. GenieAI handles that review and the redlines back and forth, so the time from first draft to signed agreement stays short. Keep a clear point of contact on each side for questions during the term, and keep the signed document somewhere both parties can find it. If you want to understand how your details are handled, read the GenieAI privacy policy.