Conditional Loan Agreement Template for Indonesia

A Conditional Loan Agreement governed by Indonesian law is a legally binding financial instrument that establishes the terms and conditions under which a lender agrees to provide financing to a borrower, subject to specific conditions being met before the loan becomes available. The agreement is structured in compliance with Indonesian Civil Code (KUHPerdata) and relevant OJK regulations, incorporating mandatory provisions for financial contracts under Indonesian law. It details the loan amount, interest rates, repayment terms, conditions precedent, security arrangements, and the rights and obligations of all parties involved, while ensuring adherence to Indonesian banking and financial services regulations.

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What is a Conditional Loan Agreement?

The Conditional Loan Agreement is a crucial financial document used when parties wish to establish a loan facility that only becomes available upon satisfaction of specific conditions. This type of agreement is particularly relevant in the Indonesian market where lenders often require certain prerequisites to be met before funds are released. The document must comply with Indonesian law, particularly the Civil Code (KUHPerdata) and OJK regulations, making it suitable for both domestic and foreign lenders operating in Indonesia. A Conditional Loan Agreement typically includes detailed conditions precedent, drawdown mechanics, security arrangements, and compliance requirements, providing a comprehensive framework for the loan relationship while ensuring regulatory compliance and risk management.

What sections should be included in a Conditional Loan Agreement?

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

2. Background: Context of the loan agreement, relationship between parties, and purpose of the loan

3. Definitions: Definitions of key terms used throughout the agreement

4. Loan Amount and Purpose: Specification of the loan amount, currency, and permitted use of funds

5. Conditions Precedent: Specific conditions that must be satisfied before the loan becomes available

6. Drawdown Mechanics: Procedures and requirements for requesting and receiving loan disbursements

7. Interest and Fees: Interest rate, calculation method, payment periods, and any applicable fees

8. Repayment Terms: Schedule of repayments, prepayment provisions, and payment mechanics

9. Representations and Warranties: Statements of fact and assurances given by the borrower

10. Covenants: Positive and negative obligations of the borrower during the loan term

11. Events of Default: Circumstances that constitute default and consequences thereof

12. Governing Law and Jurisdiction: Specification of Indonesian law as governing law and jurisdiction for disputes

13. Notices: Process and addresses for formal communications between parties

14. Execution: Signature blocks and execution requirements

What sections are optional to include in a Conditional Loan Agreement?

1. Security: Details of any collateral or security arrangements, used when the loan is secured

2. Guarantees: Terms of any guarantees provided, included when there are third-party guarantors

3. Insurance Requirements: Specific insurance obligations, included when insurance is required for security assets

4. Tax Provisions: Detailed tax handling and withholding requirements, used for complex tax situations or cross-border loans

5. Currency Provisions: Currency conversion and risk allocation, used for loans not denominated in Indonesian Rupiah

6. Assignment and Transfer: Terms for transferring or assigning the loan, included when transferability is contemplated

7. Force Majeure: Provisions for unforeseen circumstances, included when specific risk allocation is needed

8. Confidentiality: Terms regarding confidential information, included for sensitive commercial arrangements

What schedules should be included in a Conditional Loan Agreement?

1. Conditions Precedent Checklist: Detailed list of all documents and conditions required before loan disbursement

2. Repayment Schedule: Detailed amortization table showing payment dates and amounts

3. Form of Drawdown Notice: Template for borrower to request loan disbursements

4. Security Details: Detailed description of any collateral or security arrangements

5. Fees Schedule: Breakdown of all applicable fees and charges

6. Form of Compliance Certificate: Template for periodic compliance certification by borrower

7. Contact Details: List of key contacts and addresses for both parties

8. Required Insurance: Specific insurance requirements and minimum coverage levels

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

Jurisdiction

Indonesia

Publisher

Genie AI

Document Type

Financing Agreement

Cost

Free to use

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