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An unsecured loan agreement is a legal contract between a lender and a borrower that agrees to fund a loan without requiring collateral. Most of the time, when a borrowers creditworthiness indicates that they pose a low risk for defaulting on a loan, lenders agree to fund a loan request without requiring personal property to back it up. This means that a borrower is allowed funding based purely on their financial history.
Even though no collateral can be seized to satisfy an outstanding balance if a borrower defaults, an unsecured loan agreement typically offers alternative methods of recovery. For example, borrowers who default on unsecured loans can still be pursued in court to pay back the amount borrowed plus any applicable fees.
Below is a list of common sections included in Unsecured Loan Agreements. These sections are linked to the below sample agreement for you to explore.
UNSECURED LOAN AGREEMENT
This loan agreement (the “ Agreement ”) is dated April 16, 2020 and is made by and between:
Aircom Pacific, Inc. , a California corporation, as borrower (the “ Borrower ”); and
EESquare Superstore Corp. , a California corporation, as lender (the “ Lender ”),
who make this Agreement on the following terms:
| 1. | Subject of the Agreement |
| 1.1 | The Lender agrees to make loans (individually an “ Advance ” and collectively the “ Loan ”) to the Borrower for its working capital needs. Each Advance and the amount of the Loan outstanding shall be denominated in US Dollars and the maximum amount of the Loan advanced and not repaid at any time shall not exceed $1,500,000 (one million five hundred thousand) US Dollars (“ Maximum Loan Amount ”). |
| 1.2 | This Agreement shall remain effective for two years up to April 15, 2022. This Agreement is renewable upon mutual agreement. |
| 1.2 | The Borrower may repay all or any portion of the Loan at any time or from time to time, provided that the unpaid balance of each Advance shall be due and payable in full no later than one year from the date of such Advance or the termination of this Agreement , whichever comes first (each such date being a “ Termination Date ”). Amounts repaid may not be re-borrowed. |
| 2. | Loan Drawdown |
| 2.1 | The Borrower may receive the Loan in one or more Advances upon delivery of an Advance Request in the form attached to this Agreement as Exhibit 1 no later than one Business Day before the date of the requested Advance (the “ Advance Date ”) as long as, after giving effect to the requested Advance, the amount of the Loan advanced and not repaid will not be greater than the Maximum Loan Amount. |
| 2.2 | As used in this Agreement, “ Business Day ” means a day on which banks in the California are open for dealings in US Dollars in the interbank market. |
| 3. | Interest |