This Loan Agreement with Guarantee is for a loan to a business by another business or individual (although it may also be used for a loan to an individual by another individual) where a third party ("the Guarantor") guarantees payment of the loan to the lender.
Interest is charged on the loan with the interest being calculated at a monthly rate of one twelfth of a nominated annual rate above the published annual base rate from time to time of the Bank of England. Repayment of the loan and interest is on a monthly basis. The agreement contains provisions allowing for the increase or decrease in monthly payments in accordance with the increase or decrease in the published annual base rate.
The agreement allows the borrower to repay the loan and interest within a specified time but the borrower may repay the loan and interest at any time by giving notice in writing to the lender or by paying a specified number of months interest in lieu of notice. In the event of default by the borrower, the agreement states that the lender shall not be required to exhaust its remedies as against the borrower prior to enforcing its rights under the guarantee against the guarantor.
This agreement is suitable for use in the England, Scotland and Wales. It includes relevant clauses and allows inclusion of details:
- amount of loan
- period of loan
- interest rate (relative to a nominated base rate)
- monthly repayments.