Document background
The Term Loan Agreement is a fundamental financing document used in Saudi Arabia when a borrower requires medium to long-term financing for specific business purposes. It must be structured to comply with both Saudi Arabian law and Shariah principles, which prohibit the charging of interest (riba) and require specific Islamic financing structures. The agreement details the facility amount, profit rate, repayment terms, conditions precedent, representations, warranties, and covenants. It's particularly important that the document adheres to Saudi Central Bank (SAMA) regulations and includes appropriate Islamic financing mechanisms. The agreement typically includes provisions for security, events of default, and enforcement mechanisms that are compatible with Saudi Arabian law and court procedures. This document is essential for any significant corporate financing in Saudi Arabia and must be carefully drafted to ensure it is both Shariah-compliant and commercially effective.
