Few businesses have the capital needed when starting out or making a new large investment, instead of securing loans to finance these needs. A loan agreement is the written contract setting forth the conditions of the loan. Although this may sound straightforward, there are many potential pitfalls to consider such as the repayment period, interest rate, initial collateral, and more.
Consult a Minnesota loan agreements lawyer if you are looking to get a loan for your business or are currently experiencing issues with an existing loan arrangement. Having a seasoned contract attorney working for you lets you focus on your business while knowing the legal aspects of the agreement are handled.
How Are Business Loan Agreements Different from Personal Loans?
Unlike personal or home finance loans, business loans are much more flexible regarding terms. However, some basics remain the same. The party giving money is called the lender or creditor and the party receiving money is called the debtor. Minnesota provides for default terms of a loan, but almost always, the parties involved agree to different terms in writing. Because most parties specify their own terms, it is critical for However, because the terms aren’t always clear, hiring a lawyer is a good idea to ensure you know what you are agreeing to.
Typical Terms of a Business Loan Agreement
Despite the flexibility of a business loan, certain terms are almost always present. It is wise for entrepreneurs to be familiar with these common elements in order to more fully understand the terms of the contract they may be entering.
Loan Principle and Interest Rate
This provision is straightforward. This element specifies the amount of the loan, also known as the principle, and whether the loan is to be paid in a lump-sum up or in installments. The contract will also outline how long the debtor has to repay their loan and on what schedule as well as the interest that will be charged on the principle.
Collateral on a loan is property or some other valuable asset that is used as a security for the creditor. If a debtor fails to repay the loan, the creditor will take and sell the collateral to satisfy the amount owed by the debtor. In sole proprietorships and partnerships, the owners may be putting their personal belongings and assets at risk if they default on their payments.
What Are Default and Acceleration Clauses?
A default clause specifies what conditions must exist for the debtor to be in default on the loan. This includes failure to pay but may also include other circumstances such as selling collateral or taking out a second loan.
Normally, if a debtor is in default, the creditor is only entitled up to the amount of the loan that would be due at the time of default. An acceleration clause permits the creditor to ‘accelerate’ the amount in default to the total amount when the debtor defaults.
Hire a Minnesota Loan Agreements Lawyer Today
Whether you are seeking a loan to start your dream, or need a loan to expand your business further, hire a Minnesota loan agreements lawyer to give yourself peace of mind. With years of experience you can rely on, a Bloomington loan agreements lawyer could work with you to negotiate your loan agreement, explain the terms, and help you resolve any disputes moving forward. Call an attorney today to learn more about your options.