Loan Against Lease Agreement Template for the United States

A Loan Against Lease Agreement is a specialized financing document that allows you to use your leasehold interest as collateral to secure a loan. This arrangement enables you to access capital based on the value of your lease rights without surrendering possession of the leased property. The agreement creates a security interest in your lease, giving the lender specific rights if you default while allowing you to continue operating your business from the premises.

When do you need this document?

You need this agreement when you hold a valuable commercial lease and require financing for business expansion, equipment purchases, or operational capital. This is particularly common for restaurants, retail businesses, and service companies that have secured prime locations through long-term leases but need additional funding. Manufacturing businesses with specialized facility leases also use this arrangement when traditional collateral is insufficient for their financing needs. The document becomes essential when your lease represents significant value due to favorable terms, prime location, or below-market rent rates that make it attractive to lenders as security.

Key legal considerations

The agreement must clearly define the scope of the security interest in your lease rights and specify which lease benefits secure the loan. You need to ensure the underlying lease permits assignment or subletting, as many leases contain restrictions that could invalidate the security arrangement. The lender's rights upon default must be carefully outlined, including their ability to assume the lease or collect rent directly. Subordination clauses require attention, as they determine priority between the lender's security interest and the landlord's rights. The agreement should address what happens if the underlying lease is terminated, modified, or renewed, and whether these events trigger loan acceleration or require lender consent.

Legal requirements in United States

Under federal Truth in Lending Act (TILA) requirements, you must receive clear disclosure of all loan terms, including APR, finance charges, and payment schedules before signing. The security interest must be perfected according to UCC Article 9 provisions, which typically requires filing a financing statement in the appropriate state office where the lease property is located. UCC Article 2A governs the underlying lease relationship and may affect the lender's rights in the leasehold interest. Equal Credit Opportunity Act compliance ensures the lending decision cannot be based on discriminatory factors. State usury laws may cap the maximum interest rate, and you should verify compliance with local licensing requirements for the lender. Some states require additional disclosures or have specific provisions governing lease-secured financing that must be incorporated into your agreement.