Loan Commitment Agreement for Nigeria

Loan Commitment Agreement Template for Nigeria

A formal agreement governed by Nigerian law that establishes the terms and conditions under which a lender commits to provide a loan facility to a borrower. The document outlines the facility amount, availability period, conditions precedent, drawdown mechanisms, interest calculations, repayment terms, and various covenants and undertakings. It incorporates relevant provisions from Nigerian banking regulations, including compliance with Central Bank of Nigeria guidelines, and addresses specific requirements under the Banks and Other Financial Institutions Act (BOFIA) 2020.

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What is a Loan Commitment Agreement?

The Loan Commitment Agreement serves as a crucial document in Nigerian financial transactions, establishing a legally binding commitment from a lender to provide financing to a borrower under specified terms and conditions. This agreement is particularly important in the Nigerian context as it must comply with local banking regulations, including the Banks and Other Financial Institutions Act (BOFIA) 2020 and Central Bank of Nigeria guidelines. The document is typically used when a borrower requires certainty of funding availability for future needs, such as project financing, working capital, or expansion plans. It includes detailed provisions on facility terms, drawdown mechanisms, conditions precedent, covenants, and security arrangements, while also addressing specific Nigerian regulatory requirements regarding interest rates, fees, and banking practices.

What sections should be included in a Loan Commitment Agreement?

1. Parties: Identification of the lender and borrower with their full legal names, registration details, and addresses

2. Background: Context of the loan commitment, including the purpose of the facility and any relevant pre-contractual discussions

3. Definitions and Interpretation: Definitions of key terms used throughout the agreement and rules for interpreting the document

4. The Facility: Details of the loan commitment including amount, purpose, and availability period

5. Conditions Precedent: Conditions that must be satisfied before the facility becomes available

6. Drawdown: Procedures and requirements for requesting and making drawdowns under the facility

7. Interest: Interest rate, calculation method, and payment terms

8. Repayment: Terms and schedule for repayment of drawn amounts

9. Fees and Expenses: All fees payable including commitment fees, arrangement fees, and other charges

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

11. Covenants: Positive and negative obligations of the borrower during the facility period

12. Events of Default: Circumstances that would constitute default and their consequences

13. Changes to Parties: Rules regarding assignment and transfer of rights and obligations

14. Notices: Methods and requirements for formal communications between parties

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

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

1. Security: Required when the facility is to be secured, detailing the security arrangements and enforcement rights

2. Guarantee: Include when there are third-party guarantors for the facility

3. Increased Costs: Provisions dealing with changes in regulatory or market conditions affecting the lender's costs

4. Tax Gross-Up and Indemnities: Include when tax implications need specific attention, particularly for cross-border transactions

5. Multiple Lenders: Required for syndicated facilities, including voting rights and relationship between lenders

6. Currency Provisions: Include for facilities involving multiple currencies or foreign exchange considerations

7. Force Majeure: Optional provisions for unforeseen circumstances affecting performance

8. Anti-Money Laundering Provisions: Detailed AML requirements for high-risk or international transactions

What schedules should be included in a Loan Commitment Agreement?

1. Conditions Precedent: Detailed list of all documents and conditions required before facility availability

2. Form of Drawdown Notice: Template for borrower to request drawdown under the facility

3. Repayment Schedule: Detailed schedule of repayment dates and amounts if term loan structure

4. Fee Schedule: Detailed breakdown of all applicable fees and their calculation methods

5. Form of Compliance Certificate: Template for periodic confirmation of compliance with financial covenants

6. Security Documents: List and copies of all security documents if facility is secured

7. Permitted Security Interests: List of security interests allowed to exist over borrower's assets

8. Financial Covenants: Detailed financial ratios and calculations required to be maintained

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 | Serial Founder & Legal AI Author

Jurisdiction

Nigeria

Publisher

Genie AI

Document Type

Loan Agreement

Sector

Banking

Cost

Free to use
Relevant legal definitions
Clauses
Relevant Industries

Banking & Financial Services

Real Estate

Manufacturing

Agriculture

Oil & Gas

Infrastructure

Telecommunications

Healthcare

Education

Retail & Commerce

Construction

Mining

Transportation & Logistics

Technology

Relevant Teams

Legal

Finance

Treasury

Compliance

Risk Management

Corporate Banking

Credit Analysis

Operations

Business Development

Project Finance

Relevant Roles

Chief Financial Officer

Finance Director

Treasury Manager

Legal Counsel

Compliance Officer

Risk Manager

Credit Analysis Manager

Relationship Manager

Corporate Banking Officer

Investment Manager

Financial Controller

Business Development Manager

Project Finance Manager

Company Secretary

Loan Officer

Industries
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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