Peer To Peer Loan Agreement Template for Canada

The Peer to Peer Loan Agreement is designed for use in private lending transactions within Canada, where individuals or entities wish to formalize a direct lending arrangement without involving traditional financial institutions. This document becomes necessary when private parties agree to a loan transaction and need to establish legally binding terms that protect both the lender's and borrower's interests. The agreement includes essential elements such as loan amount, interest rate (compliant with Canadian usury laws), repayment terms, default provisions, and any security arrangements. It ensures compliance with federal and provincial regulations, including the Criminal Code of Canada's interest rate provisions and provincial consumer protection laws. The document can be adapted for various lending scenarios, from personal loans to small business financing, and may include additional provisions for guarantors or security interests when required.

1. Parties: Identifies and provides full details of the Lender and Borrower

2. Background: Explains the context of the loan agreement and the parties' intention to enter into a lending arrangement

3. Definitions: Defines key terms used throughout the agreement for clarity and consistency

4. Loan Amount and Purpose: Specifies the principal amount of the loan and its intended use

5. Interest Rate: Details the interest rate, calculation method, and compounding frequency

6. Repayment Terms: Outlines the repayment schedule, payment amounts, and payment methods

7. Prepayment: Describes conditions and any penalties for early repayment of the loan

8. Default: Defines events of default and consequences of defaulting on the loan

9. Representations and Warranties: Statements of fact by the borrower about their financial condition and ability to repay

10. Covenants: Ongoing obligations of the borrower during the term of the loan

11. Notices: Specifies how and where official communications between parties should be sent

12. Assignment: States whether and how the agreement can be transferred to other parties

13. Governing Law: Specifies that Canadian law governs the agreement and jurisdiction for disputes

14. General Provisions: Standard contract clauses including severability, entire agreement, and amendments