Business Finance Agreement for the United States

Business Finance Agreement Template for United States

A Business Finance Agreement is a legally binding document used in the United States that establishes the terms and conditions under which a lender provides financial facilities to a business borrower. The agreement encompasses crucial elements including loan amount, interest rates, repayment terms, security arrangements, and borrower obligations. It must comply with federal regulations such as the Truth in Lending Act and state-specific lending laws, while incorporating necessary protections for both parties.

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What is a Business Finance Agreement?

The Business Finance Agreement serves as the primary documentation for commercial lending transactions in the United States. It is utilized when businesses require funding for various purposes such as working capital, expansion, equipment purchase, or refinancing existing debt. The agreement must address both federal and state-specific regulatory requirements while providing comprehensive coverage of the financing relationship, including security arrangements, representations and warranties, and ongoing obligations of the parties. This document is fundamental to commercial lending and requires careful consideration of applicable banking regulations, UCC provisions, and state-specific lending laws.

What sections should be included in a Business Finance Agreement?

1. Parties: Identification of all parties involved in the agreement, including legal names and addresses

2. Background/Recitals: Context of the agreement and the parties' intentions

3. Definitions: Key terms used throughout the agreement

4. Facility Details: Amount, purpose, and type of financing being provided

5. Interest and Fees: Interest rates, calculation methods, and applicable fees

6. Repayment Terms: Payment schedule, methods, and conditions

7. Security: Details of any collateral or guarantees

8. Representations and Warranties: Statements of fact by the borrower about their business and financial condition

9. Covenants: Ongoing obligations of the borrower during the term of the agreement

10. Events of Default: Circumstances that constitute default and consequences

What sections are optional to include in a Business Finance Agreement?

1. Conditions Precedent: Conditions that must be met before funding - used for complex transactions or larger amounts

2. Insurance Requirements: Specific insurance coverage requirements - used when collateral is involved or business type requires specific coverage

3. Assignment and Transfer: Rights to assign or transfer the agreement - used when either party may need to transfer rights

4. Subordination: Priority of this debt relative to other debts - used when multiple lenders are involved

What schedules should be included in a Business Finance Agreement?

1. Repayment Schedule: Detailed payment amounts and dates

2. Security Details: Detailed description of collateral or security arrangements

3. Fee Schedule: Breakdown of all applicable fees

4. Financial Covenants Schedule: Specific financial ratios and requirements to be maintained

5. Conditions Precedent Checklist: List of required documents and conditions

6. Form of Compliance Certificate: Template for periodic compliance reporting

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 | Serial Founder & Legal AI Author

Cost

Free to use

Relevant legal definitions

Clauses

Relevant Industries

Financial Services
Manufacturing
Retail
Technology
Real Estate

Relevant Teams

Finance
Legal
Treasury
Risk Management
Compliance

Relevant Roles

Chief Financial Officer
Finance Director
Treasury Manager
Commercial Lending Officer
Corporate Counsel
Credit Risk Manager
Compliance Officer

Industries

Truth in Lending Act (TILA): Federal law that requires clear disclosure of lending terms and costs to protect consumers in credit transactions

Equal Credit Opportunity Act (ECOA): Federal law prohibiting discrimination in lending based on race, color, religion, national origin, sex, marital status, age, or public assistance participation

Fair Credit Reporting Act (FCRA): Federal law regulating the collection, dissemination, and use of consumer credit information

Uniform Commercial Code (UCC) Article 9: Governs secured transactions and provides rules for creation and enforcement of security interests in personal property

Securities Act of 1933: Federal law requiring registration of securities offerings and detailed financial disclosure to protect investors

Dodd-Frank Act: Comprehensive financial reform legislation enacted in response to the 2008 financial crisis, establishing new regulatory requirements and consumer protections

State Usury Laws: State-specific regulations that set maximum interest rates and govern lending practices within individual states

Blue Sky Laws: State-specific securities laws that regulate the offering and sale of securities to protect investors from fraudulent activities

Banking Regulations: Federal and state regulations governing banking institutions and their lending practices

SBA Regulations: Small Business Administration rules governing small business loans and financial assistance programs

Anti-Money Laundering Regulations: Federal regulations requiring financial institutions to prevent, detect, and report suspicious activities that might indicate money laundering

KYC Requirements: Know Your Customer protocols requiring verification of client identity and assessment of potential risks in financial relationships

Bankruptcy Laws: Federal laws governing insolvency and debtor-creditor relationships that may affect financing agreements

Tax Regulations: IRS and state tax regulations affecting business financing, including deductibility of interest and treatment of various financial instruments

Contract Laws: State and federal laws governing the formation, enforcement, and interpretation of contracts

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Unsecured Loan Agreement Between Two Companies

A U.S.-governed agreement establishing terms for an unsecured loan between two companies, including repayment obligations and default provisions.

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What is a Business Finance Agreement?

What sections should be included in a Business Finance Agreement?

What sections are optional to include in a Business Finance Agreement?

What schedules should be included in a Business Finance Agreement?

Authors

Alex Denne

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