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$110
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Estimated Time to Build: 10 - 15 Minutes
Jurisdiction: Australia Wide
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Note: This Loan Agreement:
You should obtain legal advice if you do not understand any part of the Loan Agreement.
Download the Loan Agreement (No Security) Checklist
Sample is not available for this document.
A Loan Agreement is an agreement between a Lender and a Borrower, and sets out the terms and conditions under which the Lender is prepared to lend money.
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No. Generally, the National Credit Code does not apply unless:
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Yes. Inter-company loans are loans made from one company to a related company, usually to move cash:
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Yes. An "at call" loan is a loan that does not have a fixed term and is repayable on demand.
"At call" loans may be classified as giving rise to either debt or equity interests in the company for tax purposes under the debt/equity rules.
If you require further information about "at call" loans, please seek legal and/or tax advice.
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The Debt Equity rules are contained in Division 974 of the Income Tax Assessment Act 1997 (Cth).
If you require further information about Debt Equity rules, please seek legal and/or tax advice.
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No. A Division 7A loan agreement is required when your company lends you money.
If you require a Division 7A Loan agreement please click the following link: Div 7A Loan Agreement
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No. This Loan Agreement does not contain any provision creating a charge or security interest (eg: a provision enabling the Lender to register a mortgage or security interest over the Borrower's property to protect the Lender’s interests).
If the Borrower fails to repay the loan, the Lender will not be able to:
The only recourse the Lender may have is to commence legal proceedings against the Borrower which can be time consuming and costly.
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The Lender is the person that is lending money to the Borrower.
For example, if Jayson and Kerry lend money to George then Jayson and Kerry are the Lenders.
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If the Lender is a company, enter the company's full legal name, Australian Company Number (ACN) and address. The address for the company can be any address - it does not have to be the company's registered office address.
If the Lender is an individual, enter the individual's full name and address.
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1. Where the Trustee is a Single Human
Joe Sam Bloggs is the trustee of the "Bloggs Family Trust". You should therefore enter the details in the following way:
Type of Lender: select "individual"
First Name: Joe
Second Name: Sam
Last Name: Bloggs
Capacity: type "as trustee for the Bloggs Family Trust"
2. Company is a Trustee
Black Pty Ltd (ACN 111 222 333) is trustee of the Blue Family Trust. You therefore enter the details in the following way:
Type of Lender: select "Company"
Company Name: Black Pty Ltd
ACN: 111 222 333
Capacity: type "as trustee for the Blue Family Trust"
3. More Than One Trustee
A trust can have more than one trustee. If Sam, Luke and ABC Pty Ltd are all trustees for the Blueberry Family Trust:
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This Loan Agreement is between the Lenders and Borrower(s). It is not between each of the Lenders.
This Loan Agreement only documents that the Borrower(s) owes money to the Lenders. How the Lenders divide the repayments between themselves does not form part of this Loan Agreement.
This hint is provided by Law Central Legal.
A Loan Agreement is an agreement between a Lender and a Borrower, and sets out the terms and conditions under which the Lender is prepared to lend money.
This hint is provided by Law Central Legal.
No. Generally, the National Credit Code does not apply unless:
This hint is provided by Law Central Legal.
Yes. Inter-company loans are loans made from one company to a related company, usually to move cash:
This hint is provided by Law Central Legal.
Yes. An "at call" loan is a loan that does not have a fixed term and is repayable on demand.
"At call" loans may be classified as giving rise to either debt or equity interests in the company for tax purposes under the debt/equity rules.
If you require further information about "at call" loans, please seek legal and/or tax advice.
This hint is provided by Law Central Legal.
The Debt Equity rules are contained in Division 974 of the Income Tax Assessment Act 1997 (Cth).
If you require further information about Debt Equity rules, please seek legal and/or tax advice.
This hint is provided by Law Central Legal.
No. A Division 7A loan agreement is required when your company lends you money.
If you require a Division 7A Loan agreement please click the following link: Div 7A Loan Agreement
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The Borrower is the person or persons who are borrowing money from the Lender.
For example, if Joe Brown wishes to lend money to Bill Blue and Jane Green then Bill Blue and Jane Green are the Borrowers.
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All Borrowers are responsible for repaying all the money lent to the Lender.
For example, if John, Bill and George borrowed money from Tony and Bill does not pay his share of the loan then Tony can demand that John and George pay back Bill's share of the money.
If you are a Borrower it may be better to have individual agreements with the Lender.
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If the Borrower is a company, enter the company's full legal name, Australian Company Number (ACN) and address. The address for the company can be any address - it does not have to be the company's registered office address.
If the Borrower is an individual, enter the individual's full name and address.
This hint is provided by Law Central Legal.
1. Where the Trustee is a Single Human
Joe Sam Bloggs is the trustee of the "Bloggs Family Trust". You should therefore enter the details in the following way:
Type of Borrower: select "individual"
First Name: Joe
Second Name: Sam
Last Name: Bloggs
Capacity: type "as trustee for the Bloggs Family Trust"
2. Company is a Trustee
Black Pty Ltd (ACN 111 222 333) is trustee of the Blue Family Trust. You therefore enter the details in the following way:
Type of Borrower: select "Company"
Company Name: Black Pty Ltd
ACN: 111 222 333
Capacity: type "as trustee for the Blue Family Trust"
3. More Than One Trustee
A trust can have more than one trustee. If Sam, Luke and ABC Pty Ltd are all trustees for the Blueberry Family Trust:
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The Borrower(s) should ensure that they understand the nature of the Loan Agreement and their obligations to repay any monies lent.
In this regards, the Borrower should seek independent legal advice with respect to the terms of the Loan Agreement.
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This is the initial amount of money to be lent.
If you are unsure of how much money is to be lent, just enter 1.00 (the dollar sign is already in the document). Additional money lent automatically forms part of this loan.
If you know the initial amount of money to be lent, enter the amount. For example, if you are lending $20,000.00 then you type in 20,000.00.
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More money can be lent to the Borrower. Any additional money should be confirmed in writing by the Lender and the Borrower.
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The Debt Equity rules are contained in Division 974 of the Income Tax Assessment Act 1997 (Cth).
If you require further information about Debt Equity rules, please seek legal and/or tax advice.
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"Interest" is the charge to borrow and use the Lender's money. For example, the bank may charge you 6% interest per annum for using their money.
No Interest
If you do not wish to charge the Borrower any interest this is fine. Please click on "Fixed" rate on this page ad then insert the number "0" for the Interest Rate on the next page.
Fixed Interest
A fixed rate of interest is a rate of interest that does not change during the life of the loan. If you want the rate of interest to be fixed at 8% please type in "8" as the Interest Rate (the % sign is already in the document).
Interest Rate Linked to the Benchmark Interest Rate
You have the option to make the interest rate in the Loan Agreement equal to the Benchmark Interest Rate, or above or below the Benchmark Interest Rate referred to in the Loan Agreement. The Benchmark Interest Rate is defined by subsection 109N(2) of the Income Tax Assessment Act 1936 (Cth).
Debt/Equity
The Debt Equity rules are contained in Division 974 of the Income Tax Assessment Act 1997 (Cth).
If you require further information about Debt Equity rules, please seek legal and/or tax advice.
If you are unsure as to an appropriate interest rate, you should seek legal advice.
This hint is provided by Law Central Legal.
The Debt Equity rules are contained in Division 974 of the Income Tax Assessment Act 1997 (Cth).
If you require further information about Debt Equity rules, please seek legal and/or tax advice.
This hint is provided by Law Central Legal.
The Debt Equity rules are contained in Division 974 of the Income Tax Assessment Act 1997 (Cth).
If you require further information about Debt Equity rules, please seek legal and/or tax advice.
This hint is provided by Law Central Legal.
Section 109N(2) Income Tax Assessment Act 1936 (Cth)
Benchmark interest rate
(2) The benchmark interest rate for the year of income is the Indicator Lending Rates-Bank variable housing loans interest rate last published by the Reserve Bank of Australia before the start of the year of income. However, the benchmark interest rate is the rate worked out under the regulations, if they provide for working it out.
Source:Comlaw.gov.au
Current as at 19/03/2015
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If you want to know the current Benchmark Interest Rate, look at either the Reserve Bank of Australia website or the ATO website.
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The Debt Equity rules are contained in Division 974 of the Income Tax Assessment Act 1997 (Cth).
If you require further information about Debt Equity rules, please seek legal and/or tax advice.
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A loan can be for a specified period or payable on demand by the Lender.
Payable On Demand
If a loan is "payable on demand", there is no fixed time in which the money must be repaid to the Lender. The Lender can, at any time, ask the Borrower to pay all money owing under the Loan Agreement. This means, the Lender can ask the Borrower to pay back all or part of the loan amount immediately.
Fixed Term
If the loan is for a fixed period you will need to state how long it is for. For example, if the length of the loan is 2 years, then the Borrower must pay the Lender all monies lent that have not been paid back 2 years after the Loan Agreement was signed.
Can Term of the Loan Agreement Be Changed?
Under the Loan Agreement, the Borrower and Lender can agree in writing to extend the term of the loan.
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The Loan Agreement begins from the date that it is signed. The date is hand written on the actual Loan Agreement at the time you sign it.
This hint is provided by Law Central Legal.
The Debt Equity rules are contained in Division 974 of the Income Tax Assessment Act 1997 (Cth).
If you require further information about Debt Equity rules, please seek legal and/or tax advice.
This hint is provided by Law Central Legal.
A loan can be for a specified period or payable on demand by the Lender.
Payable On Demand
If a loan is "payable on demand", there is no fixed time in which the money must be repaid to the Lender. The Lender can, at any time, ask the Borrower to pay all money owing under the Loan Agreement. This means, the Lender can ask the Borrower to pay back all or part of the loan amount immediately.
Fixed Term
If the loan is for a fixed period you will need to state how long it is for. For example, if the length of the loan is 2 years, then the Borrower must pay the Lender all monies lent that have not been paid back 2 years after the Loan Agreement was signed.
Can Term of the Loan Agreement Be Changed?
Under the Loan Agreement, the Borrower and Lender can agree in writing to extend the term of the loan.
This hint is provided by Law Central Legal.
The Loan Agreement begins from the date that it is signed. The date is hand written on the actual Loan Agreement at the time you sign it.
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More money can be lent to the Borrower. Any additional money should be confirmed in writing by the Lender and the Borrower.
This hint is provided by Law Central Legal.
The Debt Equity rules are contained in Division 974 of the Income Tax Assessment Act 1997 (Cth).
If you require further information about Debt Equity rules, please seek legal and/or tax advice.
This hint is provided by Law Central Legal.
The Loan Agreement provides you with the option of having the loan amount paid in instalments.
Fix Instalments
The instalments can be a set amount paid regularly on a specific date.
For example, an instalment could be $2,000 per month with the first instalment payable on 1 July 2016 and monthly thereafter.
Repayment Schedule
Alternatively, the instalments could be payable in accordance with a repayment schedule which you can attach to the back of the Loan Agreement. The repayment schedule should set out as a minimum the instalment amounts, when they are payable and their frequency.
The repayment schedule should be initialled by all parties and attached to each copy of the Loan Agreement. Please click here to see an example of a repayment schedule.
This hint is provided by Law Central Legal.
The Debt Equity rules are contained in Division 974 of the Income Tax Assessment Act 1997 (Cth).
If you require further information about Debt Equity rules, please seek legal and/or tax advice.
This hint is provided by Law Central Legal.
The Loan Agreement provides you with the option of having the loan amount paid in instalments.
Fix Instalments
The instalments can be a set amount paid regularly on a specific date.
For example, an instalment could be $2,000 per month with the first instalment payable on 1 July 2016 and monthly thereafter.
Repayment Schedule
Alternatively, the instalments could be payable in accordance with a repayment schedule which you can attach to the back of the Loan Agreement. The repayment schedule should set out as a minimum the instalment amounts, when they are payable and their frequency.
The repayment schedule should be initialled by all parties and attached to each copy of the Loan Agreement. Please click here to see an example of a repayment schedule.
This hint is provided by Law Central Legal.
The Loan Agreement provides you with the option of having the loan amount paid in instalments.
Fix Instalments
The instalments can be a set amount paid regularly on a specific date.
For example, an instalment could be $2,000 per month with the first instalment payable on 1 July 2016 and monthly thereafter.
Repayment Schedule
Alternatively, the instalments could be payable in accordance with a repayment schedule which you can attach to the back of the Loan Agreement. The repayment schedule should set out as a minimum the instalment amounts, when they are payable and their frequency.
The repayment schedule should be initialled by all parties and attached to each copy of the Loan Agreement. Please click here to see an example of a repayment schedule.
This hint is provided by Law Central Legal.
A guarantee is a promise by a person (i.e. the Guarantor) to assume liability for an obligation owed by another person (i.e. the Borrower) in the event that the Borrower defaults in meeting its obligations under the Loan Agreement.
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An indemnity is a primary obligation on a party (i.e. the Guarantor) to cover loss and damage suffered by another (i.e. the Lender).
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A guarantee and indemnity clause is a method of reducing risk. It is commonly used by lenders, landlords and suppliers as means of protecting themselves from the risk of default or non-payment.
It is particularly important where the:
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A guarantee is a promise by a person (i.e. the Guarantor) to assume liability for an obligation owed by another person (i.e. the Borrower) in the event that the Borrower defaults in meeting its obligations under the Loan Agreement.
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An indemnity is a primary obligation on a party (i.e. the Guarantor) to cover loss and damage suffered by another (i.e. the Lender).
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A guarantee and indemnity clause is a method of reducing risk. It is commonly used by lenders, landlords and suppliers as means of protecting themselves from the risk of default or non-payment.
It is particularly important where the:
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Select the State or Territory in which the agreement is made.
The selected State or Territory will determine which laws apply to the agreement.
For example, if the Lender and Borrower reside in New South Wales, then New South Wales should be selected as the jurisdiction.
If the Lenders and Borrowers reside in different States or Territories of Australia, only one jurisdiction can be selected. Generally you would put in the State or Territory where the Lender lives or works. If the Lender is overseas, then select the State or Territory where the Borrower lives.
WHY DOES IT MATTER?
It matters because different laws apply in each State and Territory.
If the Lender lives in South Australia then the Borrower doesn’t want to have to sue the Borrower in New South Wales.
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This document has been prepared by Law Central Legal
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