Business Loan Agreement (Malta)
Updated on 12 August 2026
Malta's Civil Code sets a general default and maximum interest rate of 8% per annum (Article 1852), and any obligation to pay interest exceeding 8% per annum is void as to the excess (Article 986(2)) — usury can even be a criminal matter at the agreement stage. Banks, however, are exempted from this 8% cap for transactions where no party is a natural person, under the Interest Rate (Exemption) Regulations (Subsidiary Legislation 16.06), so ordinary business-to-business bank lending is not subject to the general civil cap. Separately, late commercial payment interest is set at 8% plus the ECB reference rate, recalculated twice yearly, standing at 10.40% as of 1 July 2026.
An agreement translated directly from a US template does not know either the 8% civil-law cap, the bank exemption, or this late-payment formula. This agreement clearly distinguishes the agreed interest rate from late-payment interest.
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Business Loan Agreement
- Date:
- Lender:
- Borrower:
1. Amount and interest
Loan amount: . Agreed interest rate: .
2. Late payment interest
If payment is late, the statutory late payment interest rate applies: .
3. Repayment
Lender
Date:
Borrower
Date:
The 8% Civil Code cap and the bank exemption
The Civil Code sets a general 8% per annum cap on interest, with any excess void, and usury can be a criminal matter even at the agreement stage. Banks are exempted from this cap under Subsidiary Legislation 16.06 for transactions where no party is a natural person, meaning ordinary business-to-business bank lending is not subject to the 8% cap. This agreement notes which regime applies rather than assuming the cap automatically governs every loan.
Statutory late payment interest
Late commercial payment interest is set at 8% plus the ECB reference rate, recalculated twice yearly on 1 January and 1 July, standing at 10.40% as of 1 July 2026. Where a contract does not specify payment terms, interest runs automatically after 30 calendar days, and business-to-business payment terms cannot exceed 60 calendar days. This agreement shows this rate clearly as a consequence of late payment, separate from the agreed interest rate on the principal.
A fixed recovery-costs compensation
A creditor can also claim a minimum €40 fixed compensation for recovery costs once a commercial payment is late, in addition to the late payment interest itself. This agreement notes this fixed compensation as a separate, additional entitlement.
Clear separation of principal and late-payment interest
An agreement that does not separate the agreed interest rate from late-payment interest makes it harder to calculate the exact amount owed in a dispute. This template keeps these two elements in separate sections.
Section by section
- Parties
- Identifies the lender and the borrower.
- Amount and interest
- States the loan amount and the agreed interest rate.
- Late payment interest
- States the statutory late payment interest rate.
- Repayment
- Describes the loan's repayment schedule.
How to fill in the agreement
- Identify the parties. Enter the lender's and borrower's details.
- Set the amount and interest. Enter the loan amount and the agreed interest rate.
- Confirm late payment interest. Check the statutory late payment interest rate formula.
- Set the repayment terms. Enter the loan's repayment schedule.
Frequently asked questions
Does Malta cap interest rates on business loans?
The Civil Code sets a general 8% cap, but banks are exempted for business-to-business lending under Subsidiary Legislation 16.06.
What is the current statutory late payment interest rate?
8% plus the ECB reference rate, recalculated twice yearly, standing at 10.40% as of 1 July 2026.
When does late payment interest start running?
Automatically after 30 calendar days if the contract does not specify payment terms.
Is there a limit on business-to-business payment terms?
Yes, payment terms between businesses cannot exceed 60 calendar days.
Can a creditor claim recovery costs on top of late payment interest?
Yes, a minimum €40 fixed compensation for recovery costs, in addition to late payment interest.
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Disclaimer
This template and guide are provided for general information only. They are not legal advice and have not been reviewed by a lawyer. Check current lending regulations before using this document.
