Internal Loan Agreement Template for Saudi Arabia

The Internal Loan Agreement is essential for organizations operating in Saudi Arabia that need to facilitate financial arrangements between their internal entities or divisions. This document type is particularly crucial when corporate groups need to manage internal capital allocation, project financing, or working capital requirements while ensuring compliance with both Saudi Arabian law and Shariah principles. The agreement covers crucial elements including loan amount, profit structure (rather than interest), repayment terms, security arrangements, and internal approval requirements. It's designed to provide a clear framework for internal lending while maintaining compliance with SAMA regulations, Banking Control Law, and Islamic financial principles. The Internal Loan Agreement is typically used when one entity within a corporate group provides financing to another entity within the same group, requiring careful documentation of the terms and conditions to satisfy both internal governance requirements and external regulatory obligations.

1. Parties: Identification of the internal entities/divisions entering into the loan agreement, including their legal status and authority

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

3. Definitions: Key terms used throughout the agreement, including financial, technical, and legal definitions

4. Loan Amount and Purpose: Specification of the loan amount and detailed description of its intended use

5. Disbursement Terms: Conditions and procedures for disbursement of the loan amount

6. Repayment Terms: Schedule and method of repayment, including profit rate (avoiding interest terminology for Shariah compliance)

7. Security and Guarantees: Internal securities or guarantees provided for the loan

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

9. Covenants: Ongoing obligations of the borrowing entity

10. Events of Default: Circumstances constituting default and consequent remedies

11. Governing Law and Jurisdiction: Confirmation of Saudi law application and internal dispute resolution procedures

12. Notices: Communication procedures between parties

13. Execution: Signature requirements and execution formalities