assignment of a loan agreement

Assignment Of Loan

Jump to section, what is an assignment of loan.

Under an assignment of loan, a lender (the assignor) assigns its rights relating to a loan agreement to a new lender (the assignee). Only the assignor's rights under the loan agreement are assigned. The assignor will still have to perform any obligations it has under the facility agreement.

The debtor, the recipient of the loan, must be notified when a debt is assigned. When there is an assignment of a loan, a Notice of Assignment (NOA) is sent out to the debtor informing them that a new party is now responsible for collecting any outstanding amount.

Assignment Of Loan Sample

Reference : Security Exchange Commission - Edgar Database, EX-10.14 5 dex1014.htm ASSIGNMENT OF LOAN DOCUMENTS , Viewed October 21, 2021, View Source on SEC .

Who Helps With Assignment Of Loans?

Lawyers with backgrounds working on assignment of loans work with clients to help. Do you need help with an assignment of loan?

Post a project  in ContractsCounsel's marketplace to get free bids from lawyers to draft, review, or negotiate assignment of loans. All lawyers are vetted by our team and peer reviewed by our customers for you to explore before hiring.

ContractsCounsel is not a law firm, and this post should not be considered and does not contain legal advice. To ensure the information and advice in this post are correct, sufficient, and appropriate for your situation, please consult a licensed attorney. Also, using or accessing ContractsCounsel's site does not create an attorney-client relationship between you and ContractsCounsel.

Meet some of our Assignment Of Loan Lawyers

Hi, my name is O.T. and I own The Walker Collective, a law firm that caters to the contractual, intellectual property, and business formation needs of creative entrepreneurs and small business owners. I am licensed to practice in Maryland and New York.

Amber Masters has over 9 years of experience as a contracts attorney, helping small businesses with an array of agreements, such as purchase agreements, master service agreements, and employment contracts. She has an extensive background in employment agreements for dentists, doctors, and other health care professionals. She is a highly rated and acclaimed estate planning attorney and personal finance expert, who has been featured on CNBC, NBC, and Yahoo Finance. She successfully launched and sold a fintech startup and can empathize with the issues small and mid-size businesses face. Licensed in Oklahoma and Arizona.

Kendall is a data privacy attorney by trade, and is an active member of the Bar in Texas and Georgia. In litigation, he handled thousands of cases to final disposition in litigation throughout the United States, Latin America, & Europe. As corporate counsel, he guides companies through the marketing and advertising industry and, by extension, many other industries. Further, Kendall is an adherent to the Ben Hogan school of swing thought and, by natural extension, is a proponent of accurate wedge play through residential neighborhoods. He occasionally aspires to a career in turf management.

I am a Lawyer/CPA/Technology Startup Advisor/Executive with experience in global corporate law and finance, startup finance, accounting, technology, and business operations with a focus on startups of all kinds and non-profits. I have worked at a large international finance law firm, one of the Big Four Accounting firms, technology startups and non-profits. I help startups and non-profits get organized, get funded, and get going. I've seen all the mistakes made (often more than once), and so I can help you learn from, rather than repeat, history. I know all the insider rules, so you end up getting a fair start and a fair deal, rather than getting taken advantage of (whether an entrepreneur or an investor). My expertise includes: - organization of corporations | organizations of llcs | non-profits and dealing with the IRS - splitting equity | founder structure | founder equity | founder disputes - startup valuation | pitch decks and forecasts | raising capital | finding angel investors, accelerators and venture investors - SAFEs | convertible notes | preferred stock | restricted stock | stock options | 409A - Advisors - setting up cyber-secure business operations - trademarks | patents | intellectual property - employment law - cyber liability and ecommerce including privacy policies and terms of service - accounting and tax - litigation management References: https://www.upcounsel.com/profile/tjlovejr#reviews LION: LinkedIn Open Networker / connect with me at [email protected]

I am a small business attorney licensed to practice in Colorado and Texas. I focus on commercial lending and outside general counsel services.

I have been a business and real estate attorney for 38 years. I handle both transactional and litigation matters.

I am a New York attorney with 10 years as a licensed attorney and over 7 years of experience working with technology companies in the startup global ecosystem. I have direct experience advising global startups on the legal, regulatory, technology and policy issues that affect their business and competitive strategy. I am a multifaceted, globally-minded Attorney and Business Strategist who is changing the perspective of the law in business from a reactive need to a proactive tool. My legal & business strategic skill-set provides robust, forward-thinking, and solution-oriented legal services in the following areas: Drafting, Reviewing, and Negotiating (Redlining) various commercial contracts and licensing agreements; Drafting and Reviewing Employment Contracts; Contract Management using Contract Management Software; Influencer Marketing Intellectual Property Law (excluding Patent law); and Data Privacy such as GDPR, CCPA/CPRA, LGPD, and HIPAA; and Cybersecurity Law, including creating privacy by design frameworks. NOTABLE ACHIEVEMENTS: Recently achieved certifications in Ironclad Contract Management Software/Lifecycle Management, specifically: Contract Owner; Core Administration; Procurement Workflow; Sales Workflow; and Clickwrap Core Administration; Contributed to the creation of new jurisprudence in international administrative and international employment law; Drove high level contract negotiations in an international capacity where I achieved positive results for my client; and Achieved competency in Business Strategy, Business Growth Strategy, Strategic Planning and Execution, and Advanced Competitive Strategy, resulting in the publication of my legal based business strategic frameworks by leading marketplace for best business practices.

Find the best lawyer for your project

Quick, user friendly and one of the better ways I've come across to get ahold of lawyers willing to take new clients.

How It Works

Post Your Project

Get Free Bids to Compare

Hire Your Lawyer

Financial lawyers by top cities

• Austin Financial Lawyers
• Boston Financial Lawyers
• Chicago Financial Lawyers
• Dallas Financial Lawyers
• Denver Financial Lawyers
• Houston Financial Lawyers
• Los Angeles Financial Lawyers
• New York Financial Lawyers
• Phoenix Financial Lawyers
• San Diego Financial Lawyers
• Tampa Financial Lawyers

Assignment Of Loan lawyers by city

• Austin Assignment Of Loan Lawyers
• Boston Assignment Of Loan Lawyers
• Chicago Assignment Of Loan Lawyers
• Dallas Assignment Of Loan Lawyers
• Denver Assignment Of Loan Lawyers
• Houston Assignment Of Loan Lawyers
• Los Angeles Assignment Of Loan Lawyers
• New York Assignment Of Loan Lawyers
• Phoenix Assignment Of Loan Lawyers
• San Diego Assignment Of Loan Lawyers
• Tampa Assignment Of Loan Lawyers

Contracts Counsel was incredibly helpful and easy to use. I submitted a project for a lawyer's help within a day I had received over 6 proposals from qualified lawyers. I submitted a bid that works best for my business and we went forward with the project.

I never knew how difficult it was to obtain representation or a lawyer, and ContractsCounsel was EXACTLY the type of service I was hoping for when I was in a pinch. Working with their service was efficient, effective and made me feel in control. Thank you so much and should I ever need attorney services down the road, I'll certainly be a repeat customer.

I got 5 bids within 24h of posting my project. I choose the person who provided the most detailed and relevant intro letter, highlighting their experience relevant to my project. I am very satisfied with the outcome and quality of the two agreements that were produced, they actually far exceed my expectations.

Want to speak to someone?

Get in touch below and we will schedule a time to connect!

Find lawyers and attorneys by city

Loan Participation Vs Assignment

• No Comments

Sub-participation

Sub-participation is a form of loan participation in which a lender shares its risk with a second party. This type of loan participation does not change the documentation of the loan. This type of loan participation can also include future amounts for loans that have not yet been fully disbursed, such as a revolving credit facility.

The legality of sub-participation is dependent on the conditions of the loan agreement. In general, a loan participant cannot enforce the loan or proceed against the collateral on their own. Furthermore, the borrower may not even be aware that the loan participant is involved. However, the seller of the participation retains the right to enforce or compromise the loan, as well as to amend it without the consent of the participant.

As for drafting sub-participation agreements, there are many ways to do so. But it is important to include at least the following provisions: The term of the agreement, the rate of interest, and the repurchase provisions. These provisions should be included in the sub-participation or assignment agreement.

Assignment and sub-participation are standard terms in inter-bank transactions. We will examine the purposes of the loan participation and assignment agreements, as well as the terms of the transaction. While they are essentially interchangeable, they are fundamentally different.

Loan participation and assignment are both ways to transfer ownership of a loan. Assigning a loan to a third party or sub-assigning it to yourself is a common way to transfer the loan.

The terms “loan participation” and “assignment” are often used in the banking industry. Both terms refer to the transfer of a loan’s rights and payments between two financial institutions. We’ll look at what each term means and how they differ from each other.

Loan participation has long been a common form of loan transfer. Its advantages over other loan transfer methods include the ability to diversify a portfolio and limit risk. It also eliminates the need for loan servicing. However, this option can be problematic when it differs from underlying loans. For this reason, it’s important to structure loan participation carefully.

Whether a loan is a participation or an assignment depends on a variety of factors. The percentage of loan ownership, relationship with the other financial institution, and confidence in the other party are all important considerations. However, the basic difference between participation and assignment is that the former involves the original lender continuing to manage the loan while the latter takes on the responsibility of doing so.

As a rule, loan participation is a good option if the original lender does not want to keep the title of the loan. It allows the borrower to avoid the costs associated with the loan and is more attractive for borrowers. In addition, loan participation arrangements can be more flexible than outright assignments. However, it’s important to make sure that the arrangement you enter into is formal. This will prevent any confusion or conflict down the road.

Syndication

Understanding the differences between loan participation and syndication is important for lenders. Understanding these two options can help them find the best solutions for their lending needs. Syndication is a common type of lending program where lenders pool their loans together to reduce the risks of defaults. Loan participation programs can be more complex and require due diligence to be effective.

Syndicated lending allows lenders to access the expertise and business relationships of their fellow lenders while maximizing their exposure to deal flow. However, lenders who join a syndicated lending arrangement often give up some of their independence and flexibility to take unilateral action. In addition, these arrangements often involve the involvement of legal counsel, which can also be important.

A loan participation arrangement is a group of lenders coming together to fund a large loan. A lead bank underwrites the loan and sells portions of it to other financial institutions. Loan syndication, on the other hand, is an arrangement whereby multiple financial institutions pool their money together and make one large loan. In this type of arrangement, the original lender transfers the rights and obligations to the purchasing financial institution. The risk is then shared among the participating lenders, allowing them to share in the interest and the risks of the loan’s default.

A syndication contract can be structured in as many tranches as necessary to meet the borrowing needs of a customer. The underlying contract will contain a commitment contract that specifies the ratio of participation among the participants. Each tranche will have a borrower, which will be a common participant or may be different. The contract will require that each participant fulfill their commitments before the scheduled due dates.

Loan participation and assignment are standard transactions between banks. They are similar in some respects but have different purposes. 

There are many types of loan participation agreements. Some involve a full assignment, while others are a sub-participation. If you are involved in loan participation or assignment, you need to understand which type of agreement applies to your situation. There are several types of loan participation agreements, including sub-participation agreements, undisclosed agencies, and assignments.

Sub-participation agreements are typically used to assign part of the loan amount to a new lender, and the loan documentation remains unchanged. In addition, these types of agreements include future amounts, which may be provided as part of a revolving credit facility or a portion of a loan that hasn’t been fully disbursed.

Loan participation is a popular option for lenders to limit their exposure to borrowers. Lenders may sell a portion of the loan to an investor or sell a portion of their interest to another party. While the transfer of a loan portion does not always require the consent of the transferor, lenders must consider participating interest guidelines and the applicable rules.

How Do Variables Affect Bank Loan Sales?

Comments are closed.

• Participate

SALES [email protected] 501-246-5148

SUPPORT [email protected] 501-313-3414

Get ahead of the competition.

Demos of our products take only 30 minutes and we offer a free trial.

Schedule Your Demo Today

Schedule a Demo

All Rights Reserved.

• Schedule A Demo

• Bankruptcy Basics
• Chapter 11 Bankruptcy
• Chapter 13 Bankruptcy
• Chapter 7 Bankruptcy
• Debt Collectors and Consumer Rights
• Divorce and Bankruptcy
• Going to Court
• Property & Exemptions
• Student Loans
• Taxes and Bankruptcy
• Wage Garnishment

Understanding the Assignment of Mortgages: What You Need To Know

3 minute read • Upsolve is a nonprofit that helps you get out of debt with education and free debt relief tools, like our bankruptcy filing tool.  Think TurboTax for bankruptcy. Get free education, customer support, and community. Featured in Forbes 4x and funded by institutions like Harvard University so we'll never ask you for a credit card.  Explore our free tool

A mortgage is a legally binding agreement between a home buyer and a lender that dictates a borrower's ability to pay off a loan. Every mortgage has an interest rate, a term length, and specific fees attached to it.

Written by Attorney Todd Carney .  Updated November 26, 2021

If you’re like most people who want to purchase a home, you’ll start by going to a bank or other lender to get a mortgage loan. Though you can choose your lender, after the mortgage loan is processed, your mortgage may be transferred to a different mortgage servicer . A transfer is also called an assignment of the mortgage. 

No matter what it’s called, this change of hands may also change who you’re supposed to make your house payments to and how the foreclosure process works if you default on your loan. That’s why if you’re a homeowner, it’s important to know how this process works. This article will provide an in-depth look at what an assignment of a mortgage entails and what impact it can have on homeownership.

Assignment of Mortgage – The Basics

When your original lender transfers your mortgage account and their interests in it to a new lender, that’s called an assignment of mortgage. To do this, your lender must use an assignment of mortgage document. This document ensures the loan is legally transferred to the new owner. It’s common for mortgage lenders to sell the mortgages to other lenders. Most lenders assign the mortgages they originate to other lenders or mortgage buyers.

Home Loan Documents

When you get a loan for a home or real estate, there will usually be two mortgage documents. The first is a mortgage or, less commonly, a deed of trust . The other is a promissory note. The mortgage or deed of trust will state that the mortgaged property provides the security interest for the loan. This basically means that your home is serving as collateral for the loan. It also gives the loan servicer the right to foreclose if you don’t make your monthly payments. The promissory note provides proof of the debt and your promise to pay it.

When a lender assigns your mortgage, your interests as the mortgagor are given to another mortgagee or servicer. Mortgages and deeds of trust are usually recorded in the county recorder’s office. This office also keeps a record of any transfers. When a mortgage is transferred so is the promissory note. The note will be endorsed or signed over to the loan’s new owner. In some situations, a note will be endorsed in blank, which turns it into a bearer instrument. This means whoever holds the note is the presumed owner.

Using MERS To Track Transfers

Banks have collectively established the Mortgage Electronic Registration System , Inc. (MERS), which keeps track of who owns which loans. With MERS, lenders are no longer required to do a separate assignment every time a loan is transferred. That’s because MERS keeps track of the transfers. It’s crucial for MERS to maintain a record of assignments and endorsements because these land records can tell who actually owns the debt and has a legal right to start the foreclosure process.

Upsolve Member Experiences

Assignment of Mortgage Requirements and Effects

The assignment of mortgage needs to include the following:

The original information regarding the mortgage. Alternatively, it can include the county recorder office’s identification numbers. 

The borrower’s name.

The mortgage loan’s original amount.

The date of the mortgage and when it was recorded.

Usually, there will also need to be a legal description of the real property the mortgage secures, but this is determined by state law and differs by state.

Notice Requirements

The original lender doesn’t need to provide notice to or get permission from the homeowner prior to assigning the mortgage. But the new lender (sometimes called the assignee) has to send the homeowner some form of notice of the loan assignment. The document will typically provide a disclaimer about who the new lender is, the lender’s contact information, and information about how to make your mortgage payment. You should make sure you have this information so you can avoid foreclosure.

Mortgage Terms

When an assignment occurs your loan is transferred, but the initial terms of your mortgage will stay the same. This means you’ll have the same interest rate, overall loan amount, monthly payment, and payment due date. If there are changes or adjustments to the escrow account, the new lender must do them under the terms of the original escrow agreement. The new lender can make some changes if you request them and the lender approves. For example, you may request your new lender to provide more payment methods.

Taxes and Insurance

If you have an escrow account and your mortgage is transferred, you may be worried about making sure your property taxes and homeowners insurance get paid. Though you can always verify the information, the original loan servicer is responsible for giving your local tax authority the new loan servicer’s address for tax billing purposes. The original lender is required to do this after the assignment is recorded. The servicer will also reach out to your property insurance company for this reason.  

If you’ve received notice that your mortgage loan has been assigned, it’s a good idea to reach out to your loan servicer and verify this information. Verifying that all your mortgage information is correct, that you know who to contact if you have questions about your mortgage, and that you know how to make payments to the new servicer will help you avoid being scammed or making payments incorrectly.

Let's Summarize…

In a mortgage assignment, your original lender or servicer transfers your mortgage account to another loan servicer. When this occurs, the original mortgagee or lender’s interests go to the next lender. Even if your mortgage gets transferred or assigned, your mortgage’s terms should remain the same. Your interest rate, loan amount, monthly payment, and payment schedule shouldn’t change. 

Your original lender isn’t required to notify you or get your permission prior to assigning your mortgage. But you should receive correspondence from the new lender after the assignment. It’s important to verify any change in assignment with your original loan servicer before you make your next mortgage payment, so you don’t fall victim to a scam.

Attorney Todd Carney

Attorney Todd Carney is a writer and graduate of Harvard Law School. While in law school, Todd worked in a clinic that helped pro-bono clients file for bankruptcy. Todd also studied several aspects of how the law impacts consumers. Todd has written over 40 articles for sites such... read more about Attorney Todd Carney

Continue reading and learning!

It's easy to get debt help

Choose one of the options below to get assistance with your debt:

Considering Bankruptcy?

Our free tool has helped 13,733+ families file bankruptcy on their own. We're funded by Harvard University and will never ask you for a credit card or payment.

Private Attorney

Get a free evaluation from an independent law firm.

Learning Center

Research and understand your options with our articles and guides.

Already an Upsolve user?

Bankruptcy Basics ➜

• What Is Bankruptcy?
• Every Type of Bankruptcy Explained
• How To File Bankruptcy for Free: A 10-Step Guide
• Can I File for Bankruptcy Online?

Chapter 7 Bankruptcy ➜

• What Are the Pros and Cons of Filing Chapter 7 Bankruptcy?
• What Is Chapter 7 Bankruptcy & When Should I File?
• Chapter 7 Means Test Calculator

Wage Garnishment ➜

• How To Stop Wage Garnishment Immediately

Property & Exemptions ➜

• What Are Bankruptcy Exemptions?
• Chapter 7 Bankruptcy: What Can You Keep?
• Yes! You Can Get a Mortgage After Bankruptcy
• How Long After Filing Bankruptcy Can I Buy a House?
• Can I Keep My Car If I File Chapter 7 Bankruptcy?
• Can I Buy a Car After Bankruptcy?
• Should I File for Bankruptcy for Credit Card Debt?
• How Much Debt Do I Need To File for Chapter 7 Bankruptcy?
• Can I Get Rid of my Medical Bills in Bankruptcy?

Student Loans ➜

• Can You File Bankruptcy on Student Loans?
• Can I Discharge Private Student Loans in Bankruptcy?
• Navigating Financial Aid During and After Bankruptcy: A Step-by-Step Guide
• Filing Bankruptcy to Deal With Your Student Loan Debt? Here Are 3 Things You Should Know!

Debt Collectors and Consumer Rights ➜

• 3 Steps To Take if a Debt Collector Sues You
• How To Deal With Debt Collectors (When You Can’t Pay)

Taxes and Bankruptcy ➜

• What Happens to My IRS Tax Debt if I File Bankruptcy?
• What Happens to Your Tax Refund in Bankruptcy

Chapter 13 Bankruptcy ➜

• Chapter 7 vs. Chapter 13 Bankruptcy: What’s the Difference?
• Why is Chapter 13 Probably A Bad Idea?
• How To File Chapter 13 Bankruptcy: A Step-by-Step Guide
• What Happens When a Chapter 13 Case Is Dismissed?

Going to Court ➜

• Do You Have to Go To Court to File Bankruptcy?
• Telephonic Hearings in Bankruptcy Court

Divorce and Bankruptcy ➜

• How to File Bankruptcy After a Divorce
• Chapter 13 and Divorce

Chapter 11 Bankruptcy ➜

• Chapter 7 vs. Chapter 11 Bankruptcy
• Reorganizing Your Debt? Chapter 11 or Chapter 13 Bankruptcy Can Help!

State Guides ➜

• Connecticut
• District Of Columbia
• Massachusetts
• Mississippi
• New Hampshire
• North Carolina
• North Dakota
• Pennsylvania
• Rhode Island
• South Carolina
• South Dakota
• West Virginia

Upsolve is a 501(c)(3) nonprofit that started in 2016. Our mission is to help low-income families resolve their debt and fix their credit using free software tools. Our team includes debt experts and engineers who care deeply about making the financial system accessible to everyone. We have world-class funders that include the U.S. government, former Google CEO Eric Schmidt, and leading foundations.

To learn more, read why we started Upsolve in 2016, our reviews from past users, and our press coverage from places like the New York Times and Wall Street Journal.

Assignment of loan | Practical Law

Assignment of loan

Practical law uk standard document 9-500-4767  (approx. 31 pages).

Understanding an assignment and assumption agreement

Need to assign your rights and duties under a contract? Learn more about the basics of an assignment and assumption agreement.

Get your assignment of agreement

by   Belle Wong, J.D.

Belle Wong, is a freelance writer specializing in small business, personal finance, banking, and tech/SAAS. She ...

Read more...

Updated on: November 24, 2023 · 3 min read

The assignment and assumption agreement

The basics of assignment and assumption, filling in the assignment and assumption agreement.

While every business should try its best to meet its contractual obligations, changes in circumstance can happen that could necessitate transferring your rights and duties under a contract to another party who would be better able to meet those obligations.

If you find yourself in such a situation, and your contract provides for the possibility of assignment, an assignment and assumption agreement can be a good option for preserving your relationship with the party you initially contracted with, while at the same time enabling you to pass on your contractual rights and duties to a third party.

An assignment and assumption agreement is used after a contract is signed, in order to transfer one of the contracting party's rights and obligations to a third party who was not originally a party to the contract. The party making the assignment is called the assignor, while the third party accepting the assignment is known as the assignee.

In order for an assignment and assumption agreement to be valid, the following criteria need to be met:

• The initial contract must provide for the possibility of assignment by one of the initial contracting parties.
• The assignor must agree to assign their rights and duties under the contract to the assignee.
• The assignee must agree to accept, or "assume," those contractual rights and duties.
• The other party to the initial contract must consent to the transfer of rights and obligations to the assignee.

A standard assignment and assumption contract is often a good starting point if you need to enter into an assignment and assumption agreement. However, for more complex situations, such as an assignment and amendment agreement in which several of the initial contract terms will be modified, or where only some, but not all, rights and duties will be assigned, it's a good idea to retain the services of an attorney who can help you draft an agreement that will meet all your needs.

When you're ready to enter into an assignment and assumption agreement, it's a good idea to have a firm grasp of the basics of assignment:

• First, carefully read and understand the assignment and assumption provision in the initial contract. Contracts vary widely in their language on this topic, and each contract will have specific criteria that must be met in order for a valid assignment of rights to take place.
• All parties to the agreement should carefully review the document to make sure they each know what they're agreeing to, and to help ensure that all important terms and conditions have been addressed in the agreement.
• Until the agreement is signed by all the parties involved, the assignor will still be obligated for all responsibilities stated in the initial contract. If you are the assignor, you need to ensure that you continue with business as usual until the assignment and assumption agreement has been properly executed.

Unless you're dealing with a complex assignment situation, working with a template often is a good way to begin drafting an assignment and assumption agreement that will meet your needs. Generally speaking, your agreement should include the following information:

• Identification of the existing agreement, including details such as the date it was signed and the parties involved, and the parties' rights to assign under this initial agreement
• The effective date of the assignment and assumption agreement
• Identification of the party making the assignment (the assignor), and a statement of their desire to assign their rights under the initial contract
• Identification of the third party accepting the assignment (the assignee), and a statement of their acceptance of the assignment
• Identification of the other initial party to the contract, and a statement of their consent to the assignment and assumption agreement
• A section stating that the initial contract is continued; meaning, that, other than the change to the parties involved, all terms and conditions in the original contract stay the same

In addition to these sections that are specific to an assignment and assumption agreement, your contract should also include standard contract language, such as clauses about indemnification, future amendments, and governing law.

Sometimes circumstances change, and as a business owner you may find yourself needing to assign your rights and duties under a contract to another party. A properly drafted assignment and assumption agreement can help you make the transfer smoothly while, at the same time, preserving the cordiality of your initial business relationship under the original contract.

You may also like

What does 'inc.' mean in a company name?

'Inc.' in a company name means the business is incorporated, but what does that entail, exactly? Here's everything you need to know about incorporating your business.

October 9, 2023 · 10min read

How to write a will: A comprehensive guide to will writing

Writing a will is one of the most important things you can do for yourself and for your loved ones, and it can be done in just minutes. Are you ready to get started?

May 17, 2024 · 11min read

How to Start an LLC in 7 Easy Steps (2024 Guide)

2024 is one of the best years ever to start an LLC, and you can create yours in only a few steps.

May 16, 2024 · 22min read

End of the Year Sale: Get up to 35% Off on all our Plans.

Loan Agreement Template

Free Loan Agreement Templates and Sample

• • Borrower details
• • Loan terms
• • Repayment schedule

What is a loan contract, and why is it important?

A signed contract mitigates such risks to help all parties to fulfill their responsibilities reasonably.

DISCLAIMER : We are not lawyers or a law firm and we do not provide legal, business or tax advice. We recommend you consult a lawyer or other appropriate professional before using any templates or agreements from this website.

Download our free Loan Agreement Forms

When to use a loan agreement, the elements of a great loan agreement, 1. capturing details, 2. loan terms, 3. repayment schedule, 4. late charges, 5. signatures, download our free loan agreement form, faq about loan agreements, loan agreement, information, acknowledgement, promise to pay, late charges, governing law, alternative dispute resolution, entire agreement, severability, signature and date, related proposals and templates.

• Payment Agreement Template
• Accounting Contract Template

© 2024 Signaturely

• Privacy Policy
• Terms and Conditions
• Cookie Statement

What Are Assignment and Novation Clauses in a Loan Agreement?

By Jake Rickman

Updated on 12 September 2022 Reading time: 5 minutes

This article meets our strict editorial principles. Our lawyers, experienced writers and legally trained editorial team put every effort into ensuring the information published on our website is accurate. We encourage you to seek independent legal advice. Learn more .

• What Are Novation and Assignment? 

Novation and Assignment in Practice

• What Assignment Means for Your Business 
• Key Takeaways 

Frequently Asked Questions

If you get to the final stage of a business loan application, the bank will present you with a loan agreement . While some terms in the loan agreement may be familiar, others might be vaguer. For example, the lender’s right to ‘assign or transfer all its rights and obligations by novation’. This article will explain what novation and assignment mean in your loan agreement, how it operates, and how this impacts your business. 

What Are Novation and Assignment? 

Novation is a legal process that transfers rights and obligations under a contract to a third party with both parties’ consent. 

On the other hand, assignment is the right to transfer the contractual obligations of one party to a third party, regardless of whether the other party to the contract consents. 

To understand how novation and assignment apply to your loan agreement and how these rights might ultimately affect your business, it is important to consider novation and assignment in practice.

The law does not easily release parties from their contractual obligations. Otherwise, contracts would not have much legal effect. For example, after your business signs a loan agreement, you cannot simply notify the bank that another person or company will make the loan repayments on your business’s behalf. Likewise, unless the contract states otherwise, the bank must make the loan money available to your business and cannot rely on another party to do so on its behalf. 

Hence, the bank may rely on clauses in the loan agreement to release them from their obligations. Consider the following example. 

Bank A provides your company with a revolving credit facility of up to £1m. However, a year goes by, and you have not drawn on the facility. Consequently, Bank A may no longer want to honour its contractual obligation to your company.

However, Bank A cannot just transfer the loan without your approval. Hence, if you consent to Bank A’s request to sell the loan to Bank B, the law calls this novation. This means that you are essentially creating a new loan contract with Bank B. After novation, the original party, Bank A, disappears.

Even if you are not prepared to consent to Bank A’s request, it may still want to transfer the loan. Where the loan agreement contains an assignment clause, Bank A may nevertheless transfer its rights to benefit from your business’ repayment to Bank B. The law calls this an assignment.

What Assignment Means for Your Business 

Provided a bank has notified your business in writing that it intends to transfer its rights to a named third party, you are obligated to make payments to the new bank. 

If the bank does not specify the third party’s identity, your obligations do not change. 

You should also know that the bank your business initiated the loan agreement with is still obligated to provide you with any money it has promised. If it does not, you may have a legal claim against the bank. 

Key Takeaways 

Assignment and novation in a loan agreement refer to a lender’s ability to transfer its loan obligations to a third party. If the bank sells the benefit under the loan agreement (i.e. your loan repayments) to another party, this is called an assignment. If the bank notifies you that it has assigned its rights to a third party, you must direct repayments to the third party provided it informs you of the third party’s identity. The bank can also ask you to release it from its obligations to make money available to your business. This is called novation. However, if you do not consent, the bank must continue to honour any terms in the initial loan agreement. 

If you need help understanding your loan agreement, our experienced business lawyers can assist as part of our LegalVision membership. You will have unlimited access to lawyers to answer your questions and draft and review your documents for a low monthly fee. So call us today on 0808 196 8584 or visit our membership page .

An assignment in a loan agreement is where the bank sells its rights to receive your loan repayments to another lender. Provided you are properly notified, you must direct any future payments to the third party. Notably, an assignment does not release a bank from any obligations it owes you.

A novation is where the borrower consents to the lender’s request to transfer the lender’s rights and obligations under a loan agreement to a third party lender. The effect is that you will now owe your obligations under the loan agreement to the third party. In turn, the new lender carries out the initial lender’s obligations. You can enforce these obligations against the new lender.

We appreciate your feedback – your submission has been successfully received.

Register for our free webinars

Understanding your business’ new employment law obligations, a roadmap to business success: how to franchise in the uk, contact us now.

Fill out the form and we will contact you within one business day

Related articles

Different Types of Promissory Notes in England

How Do I Finance an Acquisition?

5 Tips When Purchasing a Business in England and Wales

Commercial Lease Agreements in England and Wales

We’re an award-winning law firm

2023 Economic Innovator of the Year Finalist - The Spectator

2023 Law Company of the Year Finalist - The Lawyer Awards

2023 Future of Legal Services Innovation - Legal Innovation Awards

2021 Fastest Growing Law Firm in APAC - Financial Times

• Publications

" * " indicates required fields

Assignment, novation or sub-participation of loans             

Transfers of loan portfolios between lending institutions have always been commonplace in the financial market.  A number of factors may come into play – some lenders may wish to lower their risks and proportion of bad debts in their balance sheets; some may undergo restructuring or divest their investment portfolios elsewhere, to name a few.  The real estate market in particular has been affected by the announcement of the “three red lines” policy by the People’s Bank of China in 2020 which led to a surge of transfers, or attempted transfers, of non-performing loans.  Other contributing factors include the continuous effects of the Sino-US trade war and the Covid-19 pandemic.

T +852 2905 5760 E [email protected]

Transferability of Loans

The legal analysis regarding the transferability of loans can be complex.  The loan agreement should be examined with a view to identifying any restrictions on transferability of the loan between lenders, such as prior consent of the debtor and, in some cases, whether such consent may be withheld.  Other general restrictions may apply given that most banks have internal confidentiality rules and data protection requirements, the latter of which may also be subject to governmental regulations.  Certain jurisdictions may restrict the transfer of loans relating to specific types of receivables – mortgage or consumer loans being prime examples.  It is imperative to conduct proper due diligence on the documentation and underlying assets in order to be satisfied with the transferability of the relevant loans.  This may be complicated further if there are multiple projects, facility lines or debtors.  It is indeed common to see a partial transfer of loans to an incoming lender or groups of lenders.

Methods of Transfer

The transfer of loans may be carried out in different ways and often involves assignment, novation or sub-participation.

A typical assignment amounts to the transfer of the rights of the lender (assignor) under the loan documentation to another lender (assignee), whereby the assignee takes on the assignor’s rights, such as the right to receive payment of principal and interest on the loan.  The assignor is still required to perform any obligations under the loan documentation.  Therefore, there is no need to terminate the loan documentation and, unless the loan documentation stipulates otherwise, there is no need to obtain the debtor’s consent, but notice of the assignment must be served on the debtor.  However, many debtors are in fact involved in the negotiation stage, where the parties would also take the opportunity to vary the terms of the facility and security arrangement.

Novation of a loan requires that the debtor, the existing lender (transferor) and the incoming lender (transferee) enter into new documentation which provides that the rights and obligations of the transferor will be novated to the transferee.  The transferee replaces the transferor in the loan facility and the transferor is completely discharged from all of its rights and obligations.  This method of transfer does require the prior consent of the relevant debtor.

Sub-participation is often used where a lender, whilst wishing to share the risks of certain loans, nonetheless prefers to maintain the status quo.  There is no change to the loan documentation – the lender simply sells all or part of the loan portfolio to another lender or lenders.  From the debtor’s perspective, nothing has changed and, in principle, there is no need to obtain the debtor’s consent or serve notice on the debtor.  This method of transfer is sometimes preferred if the existing lender is keen to maintain a business relationship with the debtor, or where seeking consent from the debtor or notifying the debtor of any transfer is not feasible or desirable.  In any case, there would be no change to the balance sheet treatment of the existing lender.

Offshore Security Arrangements

The transfer of a loan in a cross-border transaction often involves an offshore security package.  A potential purchaser will need to conduct due diligence on the risks relating to such security.  From a legal perspective, the security documents require close scrutiny to confirm their legality, validity and enforceability, including the nature and status of the assets involved.  Apart from transferability generally, the documents would reveal whether any consent is required.  A lender should seek full analysis on the risks relating to enforcement of security, which may well be complicated by the involvement of various jurisdictions for potential enforcement actions.

A key aspect to the enforcement consideration is whether a particular jurisdiction requires that any particular steps be taken to perfect a security interest relating to the loan portfolio (if the concept of perfection applies at all) and, if so, whether any applicable filing or registration has been made to perfect the security interest and, more importantly, whether there exists any prior or subsequent competing security interest over all or part of the same assets.  For example, security interests may be registered in public records of the security provider maintained by the companies registry in Bermuda or the British Virgin Islands for the purpose of obtaining priority over competing interests under the applicable law.  The internal register of charges of the security provider registered in the Cayman Islands, Bermuda or the British Virgin Islands should also be examined as part of the due diligence process.  Particular care should be taken where the relevant assets require additional filings under the laws of the relevant jurisdictions, notable examples of such assets being real property, vessels and aircraft.  Suites of documents held in escrow pending a potential default under the loan documentation should also be checked as they would be used by the lender or security agent to facilitate enforcement of security when the debtor defaults on the loan.

Due Diligence and Beyond

Legal due diligence on the loan documentation and security package is an integral part of the assessment undertaken by a lender of the risks of purchasing certain loan portfolios, regardless of whether the transfer is to be made by way of an assignment, novation or sub-participation.  Whilst the choice of method of transfer is often a commercial decision, enforceability of security interests over underlying assets is the primary consideration in reviewing sufficiency of the security package in any proposed loan transfer.

Hong Kong , Shanghai , British Virgin Islands , Cayman Islands , Bermuda

Banking & Asset Finance , Corporate

Banking & Financial Services

A Bird’s-eye View of Some Key Restructuring Options and Processes in Bermuda, the British Virgin Islands and the Cayman Islands

This article focuses on restructuring options and processes only, and will merely touch on formal in...

Similar but Different

While the basic features of the trust remain, there are some notable differences in how trusts can b...

Material adverse change clauses in light of the Covid-19 pandemic

Experts from each of our key global offices provide jurisdiction specific advice and answer question...

Managing the court process

Economic Substance update Q4 2020

The facilitation of cross border restructurings in Bermuda, the British Virgin Islands and the Cayman Islands

In this update, we consider the powers and discretion of the domestic courts in Bermuda, the BVI and...

Economic Substance update Q1 2020

On 18 February 2020, the Economic and Financial Affairs Council (ECOFIN) announced that Bermuda and ...

Offshore listing Vehicles to benefit from the Shanghai - London stock connect

Offshore deal value through June 2018 nearly matches 2017 total

Snapshot Petitions Report 2017

• Select your option
• find a lawyer
• find an office
• contact you

How does it work?

1. choose this template.

Start by clicking on "Fill out the template"

2. Complete the document

Answer a few questions and your document is created automatically.

3. Save - Print

Your document is ready! You will receive it in Word and PDF formats. You will be able to modify it.

Contract Assignment Agreement

Rating: 4.8 - 105 votes

This Contract Assignment Agreement document is used to transfer rights and responsibilities under an original contract from one Party, known as the Assignor, to another, known as the Assignee. The Assignor who was a Party to the original contract can use this document to assign their rights under the original contract to the Assignee, as well as delegating their duties under the original contract to that Assignee. For example, a nanny who as contracted with a family to watch their children but is no longer able to due to a move could assign their rights and responsibilities under the original service contract to a new childcare provider.

How to use this document

Prior to using this document, the original contract is consulted to be sure that an assignment is not prohibited and that any necessary permissions from the other Party to the original contract, known as the Obligor, have been obtained. Once this has been done, the document can be used. The Agreement contains important information such as the identities of all parties to the Agreement, the expiration date (if any) of the original contract, whether the original contract requires the Obligor's consent before assigning rights and, if so, the form of consent that the Assignor obtained and when, and which state's laws will govern the interpretation of the Agreement.

If the Agreement involves the transfer of land from one Party to another , the document will include information about where the property is located, as well as space for the document to be recorded in the county's official records, and a notary page customized for the land's location so that the document can be notarized.

Once the document has been completed, it is signed, dated, and copies are given to all concerned parties , including the Assignor, the Assignee, and the Obligor. If the Agreement concerns the transfer of land, the Agreement is then notarized and taken to be recorded so that there is an official record that the property was transferred.

Applicable law

The assignment of contracts that involve the provision of services is governed by common law in the " Second Restatement of Contracts " (the "Restatement"). The Restatement is a non-binding authority in all of U.S common law in the area of contracts and commercial transactions. Though the Restatement is non-binding, it is frequently cited by courts in explaining their reasoning in interpreting contractual disputes.

The assignment of contracts for sale of goods is governed by the Uniform Commercial Code (the "UCC") in § 2-209 Modification, Rescission and Waiver .

How to modify the template

You fill out a form. The document is created before your eyes as you respond to the questions.

At the end, you receive it in Word and PDF formats. You can modify it and reuse it.

Other names for the document:

Assignment Agreement, Assignment of Contract Agreement, Contract Assignment, Assignment of Contract Contract, Contract Transfer Agreement

Country: United States

General Business Documents - Other downloadable templates of legal documents

• Amendment to Agreement
• Loan Agreement
• Loan Agreement Modification
• Release of Loan Agreement
• Non-Compete Agreement
• Partnership Dissolution Agreement
• Notice of Withdrawal from Partnership
• Power Of Attorney
• Debt Acknowledgment Form
• Meeting Minutes
• Request to Alter Contract
• Release Agreement
• Guaranty Agreement
• Joint Venture Agreement
• Debt Settlement Agreement
• Breach of Contract Notice
• Corporate Proxy
• Mutual Rescission and Release Agreement
• Notice for Non-Renewal of Contract
• Meeting Notice
• Other downloadable templates of legal documents

• Skip to primary navigation
• Skip to main content
• Skip to primary sidebar
• Skip to footer

Legal Templates

Home Personal & Family Loan Agreement

Loan Agreement Template

Use our loan agreement template to detail the terms of a loan.

Updated November 13, 2023 Written by Sara Hostelley | Reviewed by Brooke Davis

A loan agreement is a legally binding contract between a lender and a borrower that a court can enforce if one party doesn’t follow the arrangement. It establishes how much money the lender is loaning and sets other terms, including the repayment schedule and interest.

Types of Loans

Secured Loans: They require collateral as a precondition for borrowing, typically a home or vehicle.

• Auto Loans: Use to purchase a vehicle.
• Mortgage Loans: Use to buy a home.
• Personal Loans: Use to fulfill any personal needs you have.

Unsecured Loans: They don’t require collateral. A borrower promises to repay the amount via a contract.

Variable-Rate Loans: They have an interest rate that changes over time.

Fixed-Rate Loans: They have an interest rate that stays the same for their entire duration.

Payday Loans: They’re short-term and immediate loans with high interest rates.

Loan Agreements By Type

When to use a loan agreement, how to get a loan, how to notarize a loan agreement, loan agreement terms and conditions, how to write a loan agreement, loan agreement sample, frequently asked questions.

Business Loan

Payment Plan

Promissory Note

Release of Debt

Deed of Trust

Mortgage Deed

You should use a written loan agreement whenever you lend or borrow money. Here are some situations where you may need to create this document:

• Starting a business with a capital loan [1]
• Purchasing land or a home with a real estate loan
• Investing in a college education or repaying a student loan
• Buying a new car or boat
• Getting a paycheck advance from an employer
• Helping a friend or family member with a personal loan

When making a loan agreement contract between family members, you should be aware that there can be tax implications. For example, if you lend money without interest, the IRS may charge you tax because it would be below the minimum interest rate required for family loans. This amount is the Applicable Federal Rate (AFR) [2] .

Also, if you’re borrowing money from family or friends and don’t have to repay the loan, the IRS will consider this transaction a gift and charge you income tax [3] .

If you see an exorbitantly high interest rate on a potential loan agreement, you shouldn’t sign it without serious consideration. You may be a victim of a loan shark, which is a lender who preys on individuals and charges the highest legal interest rate possible.

Step 1 – Check Your Credit Score

Your credit score indicates how likely you are to repay a loan. Lenders consider this metric when assessing your loan application.

The higher your credit score, the better chance a lender will want to loan to you. You can obtain your credit score from one of the three major credit bureaus, which are Experian , Transunion , and Equifax .

Once you learn your current credit score, you can understand which interest rates you may qualify for.

Step 2 – Compare Lenders

Shop around for the best personal loan option. Research and compare lenders based on interest rates, fees, repayment terms, and customer reviews.

You have several options to find personal loans:

• Banks could be the best option if you have a good to excellent credit score. They offer low interest rates, few fees, and flexible repayment terms.
• Credit unions offer loans to their members. They tend to have lower interest rates and fees and can’t charge more than 18% APR (annual percentage rate) on personal loans [4] .
• Online lenders let you prequalify, apply for, and receive personal loans online, but they have higher APRs and fees than banks and credit unions.

Consider obtaining a loan from a family member or friend who has extra money to lend. Even if you know the lender well, it’s still a good idea to get a personal loan agreement in writing.

Step 3 – Gather Necessary Documents

Lenders may request several documents to verify your information. Gather them in advance so you can present them when lenders request them.

Examples of these documents include proof of identity (like a driver’s license or an affidavit of identity ), proof of income , bank statements, and rental or mortgage agreements.

Step 4 – Get Prequalified for a Loan

Many lenders offer a prequalification process involving a soft credit check that estimates the loan amount and interest rate you might qualify for. Thanks to prequalification, you can preview the potential offers you may get from lenders and narrow them down based on potential interest rates, fees, terms, and amounts.

Note that the prequalification process doesn’t guarantee you’ll get a loan. It also doesn’t require you to accept one.

Step 5 – Start the Application Process

If you’re satisfied with the prequalification terms, pick one that matches your needs and proceed with the formal loan application. Complete the lender’s application form with accurate information, finalize the documents, and accept the terms.

Step 6 – Accept the Loan

If you receive loan offers after applying, review them carefully. Pay attention to the loan amount, interest rate, repayment term, and associated fees, and read and understand the fine print. You can accept the offer and sign the loan agreement if all the details meet your needs.

While most jurisdictions don’t require witnesses to legitimize this document, you may consider getting a notary public to sign it. A notary public will ensure all parties sign the document as themselves and without coercion.

Follow these steps to notarize a loan agreement:

Step 1 – Find a Notary Public

You can find a certified notary public at a local accountant’s office, lawyer’s office, bank, or public library. You may also use free online services to connect with a notary public who isn’t in your area.

Schedule a meeting with them. The other party (whether they’re the borrower or lender) can be present, but they may also have their signature notarized at a different time.

Step 2 – Meet With the Notary Public

Meet with the notary public. Present a valid form of government-issued ID so they can confirm your identity.

Step 3 – Sign the Agreement

Sign the agreement in front of the notary public. Once you sign, they’ll add their seal to your document.

Step 4 – Pay the Associated Fee

Pay the nominal fee for the notary public’s services. Depending on where you live, you may expect to pay between a couple dollars and $10.

A loan contract contains basic details, including the principal amount and interest. Explore some other terms and conditions that you can include within this document:

Payback Options

This document can outline the desired payback option. For example, a lender may want the borrower to pay:

• In full on a certain date
• In installments of interest only (with the principal due at a later date)
• In installments of the principal and interest

Assignment refers to letting a lender sell their right to collect payments from a borrower. This option may be useful if the lender no longer wants to collect payments from the borrower.

A guaranty provision states that a cosigner will become responsible for the loan if the original borrower fails to repay the entire amount.

Acceleration

An acceleration clause explains whether the lender can increase the repayment date or make the borrower repay the loan immediately. Possible triggers for acceleration include:

• The borrower becomes bankrupt.
• The borrower fails to follow the agreed-upon payment schedule.
• The borrower wants to pay off the note early.
• The borrower sells off a significant or material portion of their assets.

An amendments clause can outline how either party can alter the original agreement.

A collateral provision is essential for a secured loan, as it defines what property the lender can keep if the borrower defaults.

A prepayment clause determines if the borrower can pay off the loan and interest early. If the lender permits, this clause may allow the borrower to receive a discount for early payment.

Late Charges

A late charges clause states that the borrower is responsible for paying penalty fees if they make late payments.

Joint and Several Liabilities

Joint and several liabilities state that all borrowers are individually responsible for the total loan amount.

Maturity Date

The maturity date defines when the borrower should repay the full amount.

Step 1 – Name the Parties

This agreement should detail the lender’s and borrower’s full legal names.

Step 2 – Write Down the Loan Amount

Provide the amount the borrower will be loaning from the lender. This amount is the principal sum. It doesn’t account for the total amount, including accrued interest.

Step 3 – Specify Repayment Details

This section is where you must provide the details of the borrower’s loan repayment. The options you choose will have to be mutually agreed upon. You can choose whether the borrower will repay the loan in regular payments or at once.

• Regular Payments: The borrower repays the lender in a set number of payments over a specific period.
• Single Payment: The borrower repays the lender all at once by the date specified by the lender OR “on-demand” by the lender. With a “Due on Demand” payment option, the borrower repays the loan upon the lender’s demand.

If you choose regular payments, you must specify the repayment schedule, which can be monthly, quarterly, semi-annual, or annual installments.

Step 4 – Choose How the Loan Will Be Secured (Optional)

If you want the loan secured, you can include the property the borrower has put up for collateral. Make sure to provide as many relevant details as possible. Both parties must mutually agree upon this collateral for it to be legally valid in court.

Step 5 – Provide a Guarantor (Optional)

A cosigner or guarantor is optional and protects the lender if the borrower defaults on the agreement. You may require a cosigner if the borrower is in questionable financial standing. The cosigner is someone who jointly signs the agreement with the borrower.

If the borrower defaults and cannot pay back the amount in full, the cosigner is responsible for paying you back the due amount. The cosigner is usually someone in good financial standing or has excellent credit.

Step 6 – Specify an Interest Rate

You should include the interest rate you will be charging the borrower in a percentage. This interest rate will apply to the principal amount of the loan, and the borrower must agree to this rate.

Step 7 – Include Late Fees (Optional)

As a lender, you can charge late fees if the borrower does not meet a payment in time. Including a late fee can motivate the borrower to make payments on the agreed dates.

Step 8 – Determine Options for Prepayment

You can include whether penalties or discounts will apply if the borrower decides to pay the loan amount ahead of schedule. Alternatively, you can explicitly state that the agreement does not allow prepayment of the loan.

A penalty can prevent the borrower from paying the loan early and encourage long-term payments. The loan would then accrue more interest, which can be a favorable arrangement for the lender.

Step 9 – Include Provisions for a Default

When the borrower cannot repay the loan as the loan agreement details, the borrower has entered into default. It would be best to clarify how the borrower will default in the document. An agreement can say missing one payment causes a default, but a lender may choose to be more lenient.

A default can give you the legal right to accelerate payment. In this scenario, you can make the total loan amount due immediately.

Step 10 – Add in Relevant Terms

Further terms make up the remainder of the agreement and serve to protect the rights of both parties, and they include any remaining provisions such as:

• The legal right of the lender to enforce the terms of the agreement
• The costs and expenses associated with taking the case to court
• The transferability of the agreement
• The capability of alterations to part of or the entire agreement

Step 11 – Specify How You Would Like To Communicate

You can establish communication methods so both parties are on the same page. This preparation can prevent either party from claiming they didn’t receive a notice.

Step 12 – Include the Governing Law

Indicate your resident state in the agreement so both parties know which jurisdiction’s laws they must follow.

Step 13 – Determine the Resolution Method for Disputes

Detail the procedure for how both parties can resolve disagreements. Choose from several options, including court litigation, mediation, and arbitration.

Pursuing court litigation will mean the party who lost the case must pay the other party any costs and fees related to the court process.

Step 14 – Include All Relevant Signatures

All involved parties in the agreement, including personal guarantors and cosigners, must sign the document.

Download a free loan agreement template as a PDF or Word file below.

What’s the difference between a loan agreement and a promissory note?

A loan agreement and a promissory note are legal documents individuals use when borrowing money from another party. However, promissory notes tend to be shorter and more straightforward. They focus on the borrower’s pledge to repay and contain basic elements like the parties’ names, the loan amount, and the terms.

Loa agreements are more comprehensive since they outline the loan’s terms and conditions in greater detail. They often give both parties more protections, including borrower representations, warranties, and covenants.

For more detailed information, read our article on the differences between a loan agreement and a promissory note .

Can you cancel a loan agreement?

You can cancel this agreement in certain instances. Refer to the original document for termination conditions. You may also be able to cancel the loan if both parties agree to it or if you’re within your jurisdiction’s cancellation period for your specific loan type.

Can I write a loan agreement with a family member?

Yes. Consider writing this agreement when borrowing money from or lending to a family member. This agreement can help keep matters objective if you disagree about the loan’s terms later.

What does it mean to consolidate your loans?

Consolidating your loans involves obtaining one sizable loan to pay off all your loans. This way, you only have to make one payment each month. Consolidation may be a reasonable option if you can secure a loan with a low interest rate.

Legal Templates uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial guidelines to learn more about how we keep our content accurate, reliable and trustworthy.

• Working Capital Loan. https://investinganswers.com/dictionary/w/working-capital-loan
• Applicable Federal Rates (AFRs) Rulings. https://www.irs.gov/applicable-federal-rates
• Gift Tax. https://www.irs.gov/businesses/small-businesses-self-employed/gift-tax
• National Credit Union Administration. Permissible Loan Interest Rate Ceiling Extended. https://ncua.gov/regulation-supervision/letters-credit-unions-other-guidance/permissible-loan-interest-rate-ceiling-extended-2#ftn_1

Related Documents

• Demand Letter for Payment : A formal, written document demanding payment of an outstanding debt.
• Purchase Agreement : Outlines the terms and conditions of an item sale.
• Business Purchase Agreement : A legally enforceable contract that documents the sale of a business.
• Legal Resources
• Partner With Us
• Terms of Use
• Privacy Policy
• Do Not Sell My Personal Information

The document above is a sample. Please note that the language you see here may change depending on your answers to the document questionnaire.

Thank you for downloading!

How would you rate your free template?

Click on a star to rate

• Practical Law

Assignment and Assumption Agreement

Practical law glossary item 7-382-3242  (approx. 3 pages).

• United States

• Member Access

Form of Assignment Agreement (May 4 2022)

Home / Content / Legal & Documentation / Primary Market / Standard Documents / Form of Assignment Agreement (May 4 2022)

This is a form of assignment agreement (which is typically attached as an exhibit to a credit agreement) which can then be used to transfer a loan from assignor to assignee.  Included in Model Credit Agreement Provisions.

Forgotten Password

Become a Member

Membership in the LSTA offers numerous benefits and opportunities. Chief among them is the opportunity to participate in the decision making process that ultimately establishes loan market standards, develops market practices, and influences the market’s direction.

View our Latest Member Spotlight

Episode 2: John Kim

Our partners.