This free Loan Agreement template is a ready-to-use document you can fill in, export and send today. Loan agreement template between lender and borrower covering principal amount, interest rate, repayment schedule, collateral, prepayment, and events of default. Use it to agree scope, money and ownership in writing before the work starts, so a disagreement in month six has an answer. Every field is editable, the preview updates as you type, and the finished file downloads as PDF or Word with no watermark and no sign-up.
Documenting a loan properly, from family to formal
Even a loan between family or friends is worth writing down, because a clear record prevents the awkward disputes that ruin relationships. Capture the principal, the interest rate if any, the repayment schedule, what happens on default, and both signatures. Stating whether the money is a loan or a gift is the single most useful line, since tax authorities and relatives can otherwise read it differently.
Interest should be set with usury limits in mind. Many jurisdictions cap the maximum lawful rate, and a rate above the ceiling can be unenforceable or expose the lender to penalties, so a modest, clearly stated rate is safer than an aggressive one. A zero-interest loan is fine to document too, though some tax systems impute interest on larger family loans.
In India, people distinguish a promissory note from a loan agreement. A promissory note is a short instrument in which the borrower promises to repay a sum, useful for simple loans and subject to stamp duty; a loan agreement is a fuller contract covering interest, schedule, security and default. For larger sums, add a collateral clause describing the security and the lender's rights if the borrower defaults. Interest ceilings, stamping and enforcement vary by jurisdiction, so this is general information; consult a lawyer for a significant loan.
Who this Loan Agreement template is for
- Freelancers and agencies engaging clients
- Small businesses onboarding vendors or contractors
- Anyone who has been burned by scope creep or a late payment
What's included in this Loan Agreement template
- Lender name
- Lender company
- Lender address
- Borrower name
- Borrower address
- Borrower contact
- Principal amount
- Interest rate
- Loan term
- Start date
- Maturity date
- Repayment schedule
- Installment amount
- Collateral description
- Prepayment terms
- Default terms
- Governing law
- Lender signature
- Borrower signature
How to use this Loan Agreement template
- 1Name both parties by their full legal entity, not a trading name.
- 2List deliverables as nouns, then list what is explicitly out of scope.
- 3Set the fee, the payment schedule, and what happens when a payment is late.
- 4Say when intellectual property transfers — on final payment, not on delivery.
- 5Both parties sign and date, and each keeps a signed PDF.
Loan Agreement: mistakes to avoid
- The out-of-scope paragraph is the most valuable one in the document.
- Tie your deadlines to the client's inputs: "within 10 business days of receiving brand assets".
- Ask for portfolio rights explicitly. Clients rarely object, and asking later is harder.
- Name a governing jurisdiction. "We'll sort it out" is not a dispute-resolution clause.
Frequently asked questions
Is this Loan Agreement legally binding?
Once both parties sign and there is a clear offer, acceptance and consideration, an agreement of this kind is generally binding. Contract law is jurisdiction-specific, so have your standard version reviewed once by a lawyer where you operate — then reuse it.
Can I edit the clauses?
Yes, and you should. Delete what does not apply rather than trying to remember to add it. Deleting is safer than remembering.
When does the client own the work?
Whenever this document says so — and it should say on receipt of final payment, not on delivery. Until then you grant a licence, you do not assign ownership. That single clause is what lets you stop work if an invoice goes unpaid.
Do I also need a separate NDA?
Not if this agreement already contains a mutual confidentiality clause. A standalone NDA is worth signing earlier — during pitching or due diligence, before any contract exists.