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Simple Loan Note Agreement for the United Kingdom

Simple Loan Note Agreement Template for England and Wales

A Simple Loan Note Agreement under English and Welsh law is a legally binding document that evidences a debt and outlines the terms under which one party lends money to another. It includes essential terms such as the loan amount, interest rate, repayment schedule, and default provisions. The document creates a clear framework for the lending relationship while ensuring compliance with UK financial regulations and contract law principles.

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What is a Simple Loan Note Agreement?

A Simple Loan Note Agreement is commonly used in England and Wales when documenting straightforward lending arrangements between parties. This document type is particularly useful for businesses seeking capital, investors providing funding, or in situations requiring formal documentation of debt obligations. The agreement typically includes detailed provisions about the loan amount, interest calculations, repayment terms, and consequences of default. While simpler than complex facility agreements, it still provides adequate protection for both lender and borrower under English law, making it suitable for various commercial lending scenarios.

What sections should be included in a Simple Loan Note Agreement?

1. Parties: Details of the lender and borrower, including full legal names and addresses

2. Background: Context and purpose of the loan note, including relevant facts and circumstances

3. Definitions: Key terms used throughout the agreement and their specific meanings

4. Loan Amount and Purpose: Principal sum being lent and the agreed purpose of the loan

5. Interest: Interest rate, calculation method, payment frequency and interest payment terms

6. Repayment Terms: Schedule and method of repayment, including any early repayment provisions

7. Events of Default: Circumstances constituting default and consequences of default

8. Governing Law: Specification of England and Wales as governing jurisdiction and applicable law

What sections are optional to include in a Simple Loan Note Agreement?

1. Security: Details of any assets securing the loan, including registration requirements and enforcement rights

2. Guarantees: Terms of any third-party guarantees of the loan obligations

3. Transferability: Provisions governing the transfer or assignment of the loan note to other parties

4. Conversion Rights: Terms and conditions for converting the loan into equity or other securities

What schedules should be included in a Simple Loan Note Agreement?

1. Repayment Schedule: Detailed schedule of payment dates, amounts, and breakdown between principal and interest

2. Form of Transfer: Standard form for documenting any transfer of the loan note to another holder

3. Security Documents: Documentation relating to any security arrangements, including asset details and registration requirements

4. Conditions Precedent: List of conditions that must be satisfied before the loan can be drawn down

Authors

Alex Denne

Head of Growth (Open Source Law) @ ¶¶ÒõÊÓÆµ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

England and Wales

Document Type

Finance Agreement

Cost

Free to use
Relevant legal definitions



































Clauses




























Industries

Companies Act 2006: Key legislation governing company borrowing, securities, and registration requirements for charges. Essential for corporate loan note structures.

Consumer Credit Act 1974: Regulates consumer lending. Applies if the loan note is issued to an individual rather than a business, providing consumer protection requirements.

Financial Services and Markets Act 2000: Provides regulatory framework for financial instruments and requirements for transferable securities. Critical for loan note structuring and trading.

Law of Property Act 1925: Relevant when the loan note is secured against property, governing the creation and enforcement of security interests.

FCA Regulations: Financial Conduct Authority regulations governing regulated investment products and activities. Essential for compliance in financial instrument issuance.

Money Laundering Regulations 2017: Sets out requirements for due diligence and Know Your Customer (KYC) obligations in financial transactions.

Contract Law Principles: Common law principles covering offer, acceptance, consideration, intention to create legal relations, and capacity to contract.

Unfair Contract Terms Act 1977: Ensures terms in the loan note agreement are fair and reasonable, protecting parties from unfair contractual provisions.

Limitation Act 1980: Establishes time limits for the enforcement of debts and legal actions related to the loan note.

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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