Line Of Credit Form For New Business

• Category: Promissory Notes - Credit Lines
• State: Multi-State
• Control #: US-01776-NT
• Format: Word; Rich Text

Description Line Of Credit Agreement Template

This form is a secured Line of Credit Promissory Note. The form provides that the borrower will repay all sums to the lender, with interest. The agreement also provides that if the borrower defaults, the lender may declare that the entire balance is immediately due.

A Line of Credit Promissory Note is a legally binding document that outlines the terms and conditions of a loan agreement between a borrower and a lender. It serves as a written assurance from the borrower to repay the borrowed amount as per the agreed-upon terms. The Line of Credit Promissory Note is a versatile document as it allows the borrower to access funds up to a predetermined credit limit for a specified period. Typically, a Line of Credit Promissory Note template includes the following essential elements: 1. Names and contact details: The template begins with the names and contact information of both parties involved, i.e., the borrower (also referred to as the maker) and the lender. 2. Principal amount: The promissory note specifies the maximum credit limit that the lender agrees to make available to the borrower. This amount represents the total funds that the borrower can access through the line of credit. 3. Interest rate and fees: The template outlines the interest rate that the borrower must pay on the outstanding balance. This may be a fixed rate or variable rate, depending on the agreement. Additionally, any fees associated with the line of credit, such as an annual fee or transaction charges, are also mentioned. 4. Repayment terms: The promissory note template details the repayment terms, which include the schedule and frequency of payments. It may specify a minimum monthly payment or interest-only payments during a specific period. The borrower may also have the option to repay the credit line in full at any time without penalty. 5. Late payment penalties: To ensure timely repayment, the promissory note highlights the consequences of late or missed payments. It may specify late payment penalties, such as an increased interest rate or additional fees. 6. Collateral: Depending on the circumstances, collateral may be required to secure the line of credit. The template should mention the details of any assets offered as security. 7. Default and remedies: In case of default, the promissory note template must outline the actions that the lender can take to recover the unpaid amount. This may include acceleration of the remaining balance, foreclosure on collateral, or legal action. Different types of Line of Credit Promissory Notes include: 1. Revolving Line of Credit Promissory Note: This allows the borrower to access and repay the line of credit multiple times during the specified period. It offers flexibility as the borrower can borrow, repay, and borrow again as per their needs. 2. Non-Revolving Line of Credit Promissory Note: In this type, the borrower can withdraw funds from the line of credit only once. Once the borrowed amount is repaid, the credit line is closed, and the borrower cannot access additional funds. 3. Secured Line of Credit Promissory Note: This type of promissory note requires the borrower to provide collateral, such as real estate or valuable assets. It provides the lender with an added layer of security in case of default. 4. Unsecured Line of Credit Promissory Note: Unlike the secured version, this type of note does not require collateral. It may come with higher interest rates or stricter lending criteria to compensate for the increased risk. Overall, a Line of Credit Promissory Note template is a crucial document that ensures both parties are aware of their obligations and rights. It serves to protect the lender's investment while providing the borrower with access to much-needed funds.