Loan Pledge Agreement for the United States

Loan Pledge Agreement Template for United States

A Loan Pledge Agreement is a critical financial document governed by United States law that establishes both the terms of a loan and the security interest in specific collateral pledged to secure the loan obligation. The agreement combines elements of traditional loan documentation with security arrangements, incorporating provisions that comply with Article 9 of the Uniform Commercial Code and other applicable federal and state regulations. It details the loan terms, collateral description, perfection requirements, maintenance obligations, default scenarios, and enforcement mechanisms, while ensuring compliance with US lending and secured transaction laws.

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What is a Loan Pledge Agreement?

The Loan Pledge Agreement serves as a fundamental document in secured lending transactions under United States law, used when a borrower seeks to obtain financing while providing specific assets as collateral security. This agreement is particularly crucial in commercial lending scenarios where lenders require a security interest in the borrower's assets to secure the loan obligations. The document encompasses both the loan terms and the pledge arrangements, ensuring compliance with UCC Article 9 and other applicable federal and state regulations. It's commonly used in various contexts, from simple bilateral lending arrangements to complex syndicated facilities, and can accommodate different types of collateral including financial assets, equipment, inventory, or receivables. The agreement must be carefully structured to ensure enforceability and proper perfection of security interests under applicable US laws.

What sections should be included in a Loan Pledge Agreement?

1. Parties: Identifies and defines the Lender, Borrower, and any other relevant parties to the agreement

2. Background: Explains the context of the loan and pledge arrangement, including the purpose of the loan

3. Definitions: Defines key terms used throughout the agreement

4. Loan Terms: Details of the loan including principal amount, interest rate, payment schedule, and maturity date

5. Pledge and Security Interest: Describes the collateral being pledged and establishes the security interest

6. Perfection and Priority: Requirements and procedures for perfecting the security interest in the pledged collateral

7. Representations and Warranties: Statements of fact by the borrower regarding their authority, ownership of collateral, and other material matters

8. Covenants: Ongoing obligations of the borrower regarding maintenance of collateral, financial reporting, and other requirements

9. Events of Default: Circumstances that constitute default and trigger remedies

10. Remedies: Rights and actions available to the lender upon default

11. Governing Law and Jurisdiction: Specifies applicable law and courts for dispute resolution

12. Notices: Procedures for formal communications between parties

13. Miscellaneous: Standard boilerplate provisions including severability, amendments, and entire agreement

What sections are optional to include in a Loan Pledge Agreement?

1. Intercreditor Provisions: Required when multiple lenders are involved to establish priority and relationships between creditors

2. Control Agreements: Needed when collateral includes deposit accounts, securities accounts, or other financial assets requiring control agreements

3. Insurance Requirements: Detailed insurance obligations when pledged collateral requires specific insurance coverage

4. Tax Provisions: Special tax considerations and allocations, particularly relevant for complex collateral or international transactions

5. Regulatory Compliance: Specific provisions required for regulated industries or specific types of collateral

6. Valuation and Appraisal: Procedures for periodic valuation of collateral, particularly for volatile or complex assets

7. Custody Arrangements: Required when pledged assets need third-party custodian arrangements

What schedules should be included in a Loan Pledge Agreement?

1. Schedule of Pledged Collateral: Detailed description and/or inventory of all assets being pledged as collateral

2. Payment Schedule: Detailed breakdown of payment amounts, dates, and calculation methodologies

3. Form of Promissory Note: Standard form of note evidencing the loan obligation

4. UCC Filing Information: Details required for UCC filings and perfection of security interest

5. Form of Control Agreement: Standard form of account control agreement for financial accounts

6. Insurance Requirements: Specific insurance types, coverage amounts, and endorsement requirements

7. Permitted Liens: List of pre-existing or permitted liens on the collateral

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

Jurisdiction

United States

Publisher

Genie AI

Document Type

Loan Agreement

Sector

Banking

Cost

Free to use
Relevant legal definitions
Clauses
Relevant Industries

Banking

Financial Services

Real Estate

Manufacturing

Technology

Healthcare

Energy

Infrastructure

Private Equity

Asset Management

Commercial Lending

Agriculture

Retail

Transportation

Construction

Relevant Teams

Legal

Finance

Treasury

Risk Management

Compliance

Credit

Corporate Secretariat

Operations

Portfolio Management

Collateral Management

Banking Relations

Relevant Roles

Chief Financial Officer

Treasury Manager

Legal Counsel

Finance Director

Credit Risk Manager

Loan Officer

Compliance Officer

Corporate Secretary

Risk Management Officer

Portfolio Manager

Collateral Manager

Securities Officer

Financial Controller

Chief Legal Officer

Banking Relationship Manager

Industries
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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