Line Of Credit Promissory Note Template for Saudi Arabia

A Line of Credit Promissory Note under Saudi Arabian law is a formal financial instrument that combines elements of a traditional promissory note with specific features for a revolving credit facility. The document must comply with both Saudi Arabian banking regulations and Islamic (Sharia) law principles, particularly avoiding conventional interest structures. It establishes a maximum credit limit that can be drawn down as needed, includes profit calculation methods compliant with Islamic banking principles, and specifies repayment terms. The document incorporates necessary provisions for enforceability under Saudi Arabian law while maintaining alignment with SAMA regulations and Sharia requirements.

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What is a Line Of Credit Promissory Note?

The Line of Credit Promissory Note is a crucial document in Saudi Arabian banking practice, used when a financial institution extends a revolving credit facility to a borrower. This document type combines the legal enforceability of a promissory note with the flexibility of a line of credit, all while ensuring compliance with Islamic banking principles and Saudi Arabian law. It is commonly used for business financing, working capital needs, and ongoing credit requirements where the borrower needs flexibility in drawing funds up to a pre-approved limit. The document must carefully balance Sharia compliance requirements with practical banking needs, incorporating profit calculations instead of conventional interest, and including specific provisions required by Saudi Arabian banking regulations and SAMA guidelines.

What sections should be included in a Line Of Credit Promissory Note?

1. Identification of Parties: Full legal names and details of the maker (borrower) and the payee (bank/financial institution)

2. Unconditional Promise to Pay: Clear statement of the unconditional promise to pay, specifying the maximum credit limit

3. Credit Facility Terms: Details of the line of credit including maximum amount, availability period, and draw-down mechanisms

4. Payment Terms: Specification of payment obligations, including profit rate (avoiding interest terminology), payment schedule, and maturity date

5. Sharia Compliance Declaration: Statement confirming the agreement's compliance with Islamic principles

6. Events of Default: Comprehensive list of events that constitute default under the note

7. Remedies: Rights and remedies available to the payee upon occurrence of an event of default

8. Governing Law and Jurisdiction: Explicit reference to Saudi Arabian law and jurisdiction of Saudi courts

What sections are optional to include in a Line Of Credit Promissory Note?

1. Security Provisions: Include when the line of credit is secured by collateral or guarantees

2. Cross-Default Provisions: Include when the borrower has other facilities with the same bank

3. Financial Covenants: Include for corporate borrowers or large credit facilities

4. Draw-down Procedures: Include when specific procedures for utilizing the credit line need to be detailed

5. Assignment Provisions: Include when the note needs to be transferable

6. Multiple Makers Provisions: Include when there are multiple borrowers or guarantors

What schedules should be included in a Line Of Credit Promissory Note?

1. Draw-down Schedule: Template for recording draw-downs and current outstanding amount

2. Payment Schedule: Schedule of minimum payments and profit calculations

3. Security Details: Description of any collateral or security provided

4. Authorized Signatories: List of persons authorized to request draw-downs

5. Required Documents: List of supporting documents required for draw-downs

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

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Promissory Note For Lacking Document

A Saudi Arabian legal instrument acknowledging debt obligations where original documentation is missing, combining conventional financial practice with Sharia compliance requirements.

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Download a Standard Line Of Credit Promissory Note

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What is a Line Of Credit Promissory Note?

What sections should be included in a Line Of Credit Promissory Note?

What sections are optional to include in a Line Of Credit Promissory Note?

What schedules should be included in a Line Of Credit Promissory Note?

Authors

Alex Denne

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