Document background
The Loan Agreement Document serves as the primary legal instrument for documenting financing arrangements in Saudi Arabia, structured to comply with both Islamic Sharia principles and Saudi banking regulations. It is used when a lender (typically a financial institution) provides financing to a borrower, whether corporate or individual, and must be drafted to avoid conventional interest (riba) while incorporating acceptable Islamic financing structures such as Murabaha or Ijara. The agreement captures essential elements including the facility amount, profit rate mechanisms, payment schedules, and any security arrangements, while ensuring compliance with Saudi Arabian Monetary Authority (SAMA) requirements and the jurisdiction's Commercial Courts Law. This document is crucial for any financing transaction in Saudi Arabia and must be carefully structured to be both legally enforceable and Sharia-compliant.
