The Founder Loan Agreement is essential when a company founder wishes to provide financial support to their business through debt rather than equity investment. This arrangement is common in Nigerian businesses where traditional financing may be difficult to obtain or when founders prefer to maintain existing equity structures. The agreement must comply with Nigerian corporate law, particularly the Companies and Allied Matters Act (CAMA) 2020, and relevant financial regulations. A well-structured Founder Loan Agreement should address key elements including loan terms, interest rates, repayment schedules, default provisions, and any security arrangements, while considering the founder's dual role as both lender and key stakeholder in the business. This document is particularly crucial for maintaining clear financial boundaries and protecting both the founder's and company's interests in the transaction.

1. Parties: Identification of the Founder as lender and the Company as borrower, including full legal names and addresses

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

3. Definitions and Interpretation: Definitions of key terms used throughout the agreement and rules of interpretation

4. Loan Amount and Purpose: Specification of the loan amount and its intended use by the company

5. Interest Rate and Calculations: Details of applicable interest rate, calculation method, and payment periods

6. Repayment Terms: Repayment schedule, method of payment, and any early repayment provisions

7. Conditions Precedent: Conditions that must be satisfied before the loan becomes effective

8. Representations and Warranties: Statements of fact and assurances given by both parties

9. Covenants: Ongoing obligations of the company during the loan period

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

11. Tax Provisions: Treatment of taxes on interest payments and other tax-related obligations

12. Notices: Process and requirements for formal communications between parties

13. Governing Law and Jurisdiction: Specification of Nigerian law as governing law and jurisdiction for disputes

14. Execution: Signature blocks and execution requirements