Small Business Loan Agreement for New Zealand

Small Business Loan Agreement Template for New Zealand

A comprehensive legal agreement governed by New Zealand law that establishes the terms and conditions under which a financial institution provides a loan to a small business entity. The document outlines the loan amount, interest rates, repayment terms, security arrangements, and obligations of all parties involved. It incorporates requirements from New Zealand's financial regulations, including the Credit Contracts and Consumer Finance Act 2003 and the Financial Service Providers Act 2008, while providing necessary protections for both lender and borrower. The agreement includes provisions for default, enforcement, and dispute resolution specific to the New Zealand legal context.

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What is a Small Business Loan Agreement?

The Small Business Loan Agreement is a crucial document used in New Zealand's financial sector when a lending institution provides financing to small and medium-sized enterprises. This agreement is essential for transactions where businesses seek capital for growth, working capital, asset purchase, or other business purposes. It must comply with New Zealand's financial services legislation, including the Contract and Commercial Law Act 2017 and Financial Service Providers (Registration and Dispute Resolution) Act 2008. The document typically includes detailed terms about loan amount, interest calculations, repayment schedules, security arrangements, and default provisions. It's designed to protect both the lender's interests in recovering the loan and the borrower's rights under New Zealand law, while ensuring transparency and fairness in the lending relationship.

What sections should be included in a Small Business Loan Agreement?

1. Parties: Identifies the lender and borrower with their full legal names, addresses, and company registration numbers if applicable

2. Background: Outlines the context of the loan agreement, including the borrower's request for financing and the lender's agreement to provide it

3. Definitions: Defines key terms used throughout the agreement for clarity and legal certainty

4. Loan Amount and Purpose: Specifies the principal amount of the loan and its approved business purpose

5. Interest Rate and Calculations: Details the applicable interest rate, calculation method, and any circumstances for rate changes

6. Repayment Terms: Specifies the repayment schedule, payment amounts, and payment methods

7. Conditions Precedent: Lists conditions that must be satisfied before the loan is advanced

8. Representations and Warranties: States the borrower's assertions about their legal and financial status

9. Borrower Covenants: Details the borrower's ongoing obligations and restrictions during the loan term

10. Events of Default: Defines circumstances that constitute default and the lender's rights in such events

11. General Provisions: Contains standard legal clauses including notices, amendments, governing law, and dispute resolution

What sections are optional to include in a Small Business Loan Agreement?

1. Security Arrangements: Required when the loan is secured against business assets or property

2. Guarantees: Included when personal or corporate guarantees are required for the loan

3. Insurance Requirements: Needed when specific insurance coverage is required for secured assets

4. Early Repayment: Details early repayment options and any associated fees or penalties

5. Draw Down Provisions: Required for loans with multiple draw down periods or installment advances

6. Financial Covenants: Included for larger loans requiring ongoing financial performance metrics

7. Subordination Provisions: Required when the loan needs to be subordinated to other debt

8. Assignment and Transfer: Included when either party may need to transfer their rights or obligations

What schedules should be included in a Small Business Loan Agreement?

1. Repayment Schedule: Detailed breakdown of payment dates, amounts, and allocation between principal and interest

2. Security Details: Comprehensive list and description of assets provided as security

3. Conditions Precedent Checklist: List of documents and conditions required before loan advancement

4. Fee Schedule: Breakdown of all applicable fees, charges, and when they apply

5. Financial Reporting Requirements: Templates and requirements for ongoing financial reporting

6. Permitted Security Interests: List of pre-approved or existing security interests on business assets

7. Insurance Requirements: Detailed specifications of required insurance coverage

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

New Zealand

Publisher

Genie AI

Document Type

Finance Agreement

Cost

Free to use
Relevant legal definitions
Relevant Industries

Banking and Financial Services

Small Business and SMEs

Retail

Professional Services

Manufacturing

Agriculture

Technology

Hospitality

Construction

Healthcare

Transport and Logistics

Real Estate

Relevant Teams

Legal

Commercial Banking

Credit Risk

Compliance

Business Banking

Small Business Banking

Document Management

Operations

Risk Assessment

Finance

Customer Relations

Corporate Advisory

Relevant Roles

Commercial Banker

Loan Officer

Credit Analyst

Business Development Manager

Financial Advisor

Legal Counsel

Compliance Officer

Risk Manager

Small Business Owner

Chief Financial Officer

Account Manager

Banking Relationship Manager

Corporate Lawyer

Finance Manager

Business Banking Manager

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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