Non Recourse Loan Agreement Template for Nigeria

The Non-Recourse Loan Agreement is a critical financing instrument in Nigerian commercial practice, particularly suited for project finance and asset-based lending transactions. This document type is essential when lenders agree to look solely to specific assets for loan recovery, commonly used in real estate, infrastructure, and resource-based financing. The agreement must comply with Nigerian banking regulations, including BOFIA 2020 and CBN guidelines, while incorporating robust security and enforcement mechanisms. It typically includes detailed provisions for collateral valuation, maintenance, and enforcement procedures, reflecting the increased risk profile for lenders. The document becomes particularly relevant in large-scale project financing where project assets serve as the primary security, requiring careful structuring to ensure enforceability under Nigerian law.

1. Parties: Identifies and defines the Lender and Borrower with full legal names and addresses

2. Background: Contextual information about the loan purpose and non-recourse nature

3. Definitions and Interpretation: Defines key terms and interpretation rules for the agreement

4. The Loan: Details of the loan amount, purpose, and disbursement terms

5. Non-Recourse Provisions: Explicit limitations on recourse and specification of the sole remedy against the collateral

6. Collateral: Detailed description of the security assets and perfection requirements

7. Conditions Precedent: Prerequisites for loan disbursement including documentation and regulatory requirements

8. Representations and Warranties: Borrower's statements about legal capacity, collateral ownership, and other material facts

9. Covenants: Borrower's ongoing obligations regarding collateral maintenance and reporting

10. Events of Default: Circumstances constituting default and consequences

11. Enforcement and Remedies: Lender's rights against the collateral upon default

12. Payments and Calculations: Payment mechanics, interest calculations, and fee structures

13. Tax Provisions: Treatment of taxes and withholding requirements

14. Changes to Parties: Rules for assignment and transfer of rights

15. Notices: Communication procedures between parties

16. Governing Law and Jurisdiction: Nigerian law governance and dispute resolution provisions

17. Boilerplate Provisions: Standard contractual provisions including severability and entire agreement clauses