Loan Guarantee Agreement Template for Nigeria

The Loan Guarantee Agreement is a crucial financial security instrument in Nigerian commercial practice, used when a third party (Guarantor) agrees to secure the loan obligations of a Borrower. This document is essential in situations where additional security is required by a Lender to mitigate credit risk, particularly in commercial lending, project finance, or significant personal loans. The agreement must comply with Nigerian contract law, banking regulations (including the Banks and Other Financial Institutions Act), and relevant Central Bank of Nigeria directives. It typically includes comprehensive provisions covering the nature and extent of the guarantee, enforcement mechanisms, and the rights and obligations of all parties. The document is particularly important in the Nigerian context where lenders often require additional security measures to support lending decisions in various sectors of the economy.

1. Parties: Identifies the Guarantor, the Lender, and the Borrower with their full legal names and addresses

2. Background: Recitals explaining the context of the loan agreement and the purpose of the guarantee

3. Definitions and Interpretation: Defines key terms used throughout the agreement and sets out interpretation rules

4. Guarantee and Indemnity: Core section detailing the guarantee obligations, including the scope and nature of the guarantee

5. Guarantor's Representations and Warranties: Statements of fact and assurances given by the guarantor regarding their capacity and authority

6. Continuing Security: Establishes that the guarantee remains in effect until all secured obligations are fully discharged

7. Preservation of Rights: Protects the lender's rights and remedies under the guarantee

8. Payments: Details the payment obligations, including timing, method, and currency of payments

9. Interest: Specifies interest charges on demanded sums under the guarantee

10. Tax Gross-up and Indemnities: Addresses tax-related obligations and indemnities

11. Costs and Expenses: Allocates responsibility for costs related to the guarantee

12. Notices: Specifies how formal communications between parties should be made

13. Governing Law and Jurisdiction: Specifies Nigerian law as governing law and sets jurisdiction for disputes