Revolving Loan Agreement Template for Indonesia

A revolving loan agreement provides your business with flexible access to credit, allowing you to draw down funds when needed and repay them when cash flow permits, all while maintaining the ability to redraw up to your facility limit. This financing structure is particularly valuable for Indonesian businesses managing seasonal fluctuations or requiring ongoing working capital support.

When do you need this document?

You'll require a revolving loan agreement when your business needs flexible financing that traditional term loans cannot provide. This includes situations where you're managing seasonal inventory requirements, covering temporary cash flow gaps, or financing ongoing operational expenses. Indonesian companies in manufacturing often use these facilities to fund raw material purchases ahead of production cycles, while trading companies rely on them to bridge the gap between purchasing inventory and collecting receivables. The revolving nature means you only pay interest on amounts actually drawn, making it cost-effective for businesses with variable funding needs.

Key legal considerations

Your revolving loan agreement must include comprehensive conditions precedent that protect the lender's interests while ensuring you can access funds when needed. Security provisions typically require personal or corporate guarantees, and may include charges over business assets or real property. Interest calculation mechanisms must be clearly defined, including how rates adjust and when payments are due. The facility agreement should specify draw-down procedures, minimum utilization requirements, and prepayment terms. Default provisions need careful attention, as they determine when the lender can accelerate the facility or demand immediate repayment. Covenant structures will govern your ongoing financial reporting obligations and operational restrictions during the facility term.

Legal requirements in Indonesia

Under Indonesian banking law, your revolving loan agreement must comply with Banking Law No. 7 of 1992 as amended by Law No. 10 of 1998, which governs lending operations and facility structures. The Financial Services Authority (OJK) under Law No. 21 of 2011 requires specific disclosures and consumer protection measures in lending documentation. Bank Indonesia Regulation No. 17/12/PBI/2015 may impose loan-to-value limitations depending on your facility's security structure. Indonesian Civil Code provisions govern contract formation, performance, and enforcement mechanisms. If foreign parties are involved, you'll need proper process agent appointments and may require specific regulatory approvals. The agreement must be executed in Indonesian Rupiah unless Bank Indonesia permission is obtained for foreign currency facilities, and certain large facilities may require additional regulatory notifications or approvals from relevant authorities.