Simple Construction Loan Agreement Template for Philippines

The Simple Construction Loan Agreement is essential for financing construction projects in the Philippines, providing a legally compliant framework for both lenders and borrowers. This document is typically used when a borrower requires financing for new construction, renovation, or development projects, with loan disbursement usually tied to construction milestones. The agreement incorporates key requirements from Philippine banking regulations, construction laws, and consumer protection legislation, ensuring comprehensive coverage of lending terms, construction specifications, and security arrangements. It's particularly suited for straightforward construction projects where a single lender provides financing to a borrower, as opposed to more complex syndicated lending arrangements. The document addresses essential elements including loan terms, construction requirements, monitoring provisions, and security arrangements, while maintaining compliance with Philippine legal requirements.

1. Parties: Identifies and defines the Lender and Borrower with their complete legal names, addresses, and registration details

2. Background: Describes the context of the loan, including the construction project's basic details and the parties' intentions

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

4. Loan Amount and Purpose: Specifies the total loan amount and confirms its exclusive use for the construction project

5. Interest Rate and Fees: Details the interest rate, calculation method, and any applicable fees

6. Disbursement of Loan: Outlines the conditions and process for loan disbursement, typically in tranches based on construction progress

7. Repayment Terms: Specifies the repayment schedule, payment methods, and consequences of default

8. Security and Collateral: Details the assets or guarantees securing the loan

9. Representations and Warranties: Lists the legal assertions made by the Borrower regarding their capacity and the project

10. Borrower's Covenants: Sets out the Borrower's ongoing obligations regarding the construction project and loan

11. Construction Requirements: Specifies construction standards, timelines, and completion requirements

12. Monitoring and Inspection Rights: Establishes the Lender's rights to monitor construction progress and inspect the project

13. Events of Default: Lists circumstances constituting default and their consequences

14. Remedies: Outlines the Lender's rights and remedies in case of default

15. Governing Law and Jurisdiction: Specifies Philippine law as governing law and determines jurisdiction for disputes

16. Notices: Details how formal communications between parties should be made

17. Miscellaneous: Includes standard boilerplate provisions such as amendments, severability, and entire agreement