Business Loan Contract Template for India

A Business Loan Contract is a fundamental document used when a business entity seeks financial assistance from a bank or financial institution in India. This agreement is essential for documenting the lending relationship and ensuring legal compliance with Indian banking regulations, including RBI guidelines and the Banking Regulation Act. The contract typically covers loan amount, purpose, interest rates, repayment schedule, security details, and various covenants. It's particularly important as it creates legally binding obligations and provides security for the lender while establishing clear terms for the borrower. The document must comply with Indian contract law requirements and often needs to be stamped and registered according to local state laws to be legally enforceable.

1. Parties: Identification of the lender and borrower with complete details including registration numbers, addresses and authorized representatives

2. Background: Context of the loan agreement including purpose of the loan and any relevant pre-contractual discussions

3. Definitions: Definitions of key terms used throughout the agreement

4. Loan Amount and Purpose: Specific details of the loan amount and its approved business purpose

5. Interest Rate and Computation: Details of interest rate, basis of computation, and change mechanisms

6. Repayment Terms: Schedule of repayment including principal and interest payment dates

7. Security: Details of primary and collateral security offered against the loan

8. Conditions Precedent: Conditions that must be satisfied before loan disbursement

9. Representations and Warranties: Statements of fact and assurances given by the borrower

10. Borrower's Covenants: Positive and negative obligations of the borrower during the loan term

11. Events of Default: Circumstances constituting default and consequences thereof

12. Lender's Rights and Remedies: Actions lender can take in case of default or breach

13. Governing Law and Jurisdiction: Applicable law and courts having jurisdiction over disputes