Bank Loan Agreement Template (US)
Updated on August 9, 2026
A bank loan agreement documents a commercial lending relationship: a bank or other lender extends credit to a business borrower, on repayment, interest, default and dispute-resolution terms distinct from a consumer vehicle loan or a private seller-financed sale. It's identifiable by its borrower fields — business structure, time in business, trade references — rather than an individual consumer profile.
The widely circulated free version of this agreement has a clause literally titled "Guarantors" that states no guarantor is responsible for anything, an arbitration clause that names no rules body or seat, no collateral or security section at all, and hard-codes the currency as USD. This template fixes each of those: an optional, functioning guarantor mechanism, an optional collateral clause instead of silent unsecured lending, a named arbitration administrator and seat, and a currency field that isn't locked to one jurisdiction.
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Bank Loan Agreement
- Borrower:
- ,
- Business structure:
- In business since:
- Lender:
- ,
1. Promise to pay
On , Borrower promises to pay Lender the principal sum of (the "Loan"), with interest accruing on the unpaid balance at percent per annum.
2. Payment
The full balance, including accrued interest and fees, is due on . The Loan shall be repaid as follows:
3. Collateral
This Loan is unsecured. No collateral secures Borrower's obligations under this Agreement.
4. Guarantor
No person or entity other than Borrower is responsible for repayment under this Agreement.
5. Default and default interest
An Event of Default occurs if Borrower fails to make a payment when due, breaches a material term of this Agreement, provides false information in connection with the Loan, or becomes insolvent or subject to bankruptcy proceedings. Upon default, Lender may, where permitted by applicable law, increase the interest rate to percent per annum, not to exceed the maximum rate permitted under applicable usury law.
6. Late payments
If a payment is not received within days of its due date, Borrower shall pay a late fee of percent of the unpaid amount, to the extent permitted by applicable law.
7. Acceleration and cross-default
If an Event of Default is not cured within any applicable cure period, Lender may declare the full outstanding balance immediately due and payable. A default by Borrower under any other agreement between Borrower and Lender shall also constitute an Event of Default under this Agreement.
8. Set-off
Following an Event of Default, Lender may apply any funds of Borrower held in any account at Lender against amounts due under this Agreement, without prior notice, to the extent permitted by applicable law.
9. Attorneys' fees and costs
The prevailing party in any action to enforce this Agreement is entitled to recover its reasonable attorneys' fees and costs from the non-prevailing party.
10. Dispute resolution
Any dispute arising under this Agreement shall be resolved by binding arbitration administered by , seated in , under that administrator's rules then in effect. The prevailing party in arbitration is entitled to its reasonable costs and attorneys' fees.
11. Confidentiality
Each party shall keep confidential any non-public information obtained through this Agreement and shall exercise the same degree of care in protecting it as required by applicable law.
12. Prepayment
Borrower may prepay all or part of the outstanding balance at any time without penalty.
13. General provisions
This Agreement is governed by the laws of . If any provision is held invalid, the remaining provisions remain in full force. Any modification must be in writing signed by both parties. This Agreement may be executed in counterparts. No failure to insist on strict compliance with any term constitutes a waiver of that term unless expressly agreed in writing.
Lender
Date:
Borrower
Date:
Make the guarantor clause actually do something
A clause headed "Guarantors" that goes on to say no one but the borrower is responsible for the debt isn't a guarantor election — it's confusing drafting that promises a mechanism and then cancels it in the same sentence. This template makes the guarantor clause a genuine optional toggle: switched off, the loan is unsecured by any guarantor and the clause says so plainly; switched on, it names the guarantor and states their liability.
Decide collateral explicitly instead of leaving it silent
The source document has no collateral or security section at all — the loan is silently unsecured, which may or may not reflect what the parties actually intend. A real commercial loan agreement should state whether the loan is secured, and if so, by what collateral, so the lender's position is clear rather than assumed by omission.
Name the arbitration administrator and seat
"The parties may submit to arbitration chosen by both parties" names no administering body, no procedural rules, and no seat — in practice, an arbitration clause this vague is a fight waiting to happen rather than a dispute-resolution mechanism. This template requires naming a specific arbitration administrator (such as the American Arbitration Association) and the city or state that will serve as the seat of arbitration, which determines the procedural law that applies to the arbitration itself.
Cap default interest and state a real interest-rate ceiling awareness
The source lets the lender raise the interest rate on default to any figure "permitted under applicable law" without stating a number or acknowledging that state usury laws cap the maximum interest rate a lender may charge, with the cap varying significantly by state and by the type of lender. This template requires stating the actual default rate and flags the usury-cap check as a compliance item rather than leaving the rate open-ended.
Add cross-default and set-off, and fix the currency lock-in
A commercial lender typically wants two protections the source document omits entirely: a cross-default clause (a default under another agreement between the same parties also triggers default here) and a set-off right (the lender may apply the borrower's other funds held at the bank against the debt after a default). This template adds both as standard commercial-lending terms, and replaces the hard-coded "USD" in the interest clause with a currency field so the agreement isn't locked to one country's currency by default.
Clause-by-clause guide
- Promise to pay
- States the principal amount, currency and interest rate.
- Payment schedule
- Sets the repayment schedule and maturity date.
- Collateral
- States whether the loan is secured, and if so, by what collateral — rather than leaving it silent.
- Guarantor
- An optional clause naming a guarantor and their liability, or stating plainly that none exists.
- Default and default interest
- Defines default and states the actual default interest rate, subject to applicable usury limits.
- Acceleration and cross-default
- Lets the lender accelerate on default, including a default under another agreement between the same parties.
- Set-off
- Allows the lender to apply the borrower's other funds held at the bank against the debt after a default.
- Arbitration
- Names a specific arbitration administrator and seat rather than leaving the process undefined.
US compliance checklist
Commercial lending terms interact with state usury, UCC and dispute-resolution law.
Check the state usury cap
Maximum lawful interest rates vary by state and by lender type; confirm the stated rate and default rate do not exceed the applicable cap before finalizing the agreement.
Perfect any collateral interest under the UCC
If the loan is secured, the lender's security interest in business collateral typically needs a UCC-1 financing statement filed with the relevant state authority to be perfected against other creditors.
Confirm the arbitration clause is enforceable in your state
Arbitration clauses are generally enforceable under the Federal Arbitration Act, but naming a specific administrator, rules and seat avoids the unenforceable-by-vagueness problem of an undefined arbitration promise.
Check guarantor formalities
Some states require a guaranty to be in a specific form or separately signed to be enforceable; confirm the requirement in the governing-law state before relying on a guarantor clause.
How to complete the agreement
- Enter the loan terms. Add the principal amount, currency, interest rate and payment schedule.
- Decide on collateral. State whether the loan is secured, and if so, by what collateral.
- Decide on a guarantor. Name a guarantor if one exists, or leave the clause off for an unsecured loan with no guarantor.
- Set default terms. Add the default interest rate and late-fee terms.
- Name the arbitration administrator and seat. Choose a specific arbitration body and location rather than leaving the process undefined.
Frequently asked questions
What's the difference between a bank loan agreement and an auto loan agreement?
A bank loan agreement is a general commercial lending document — the borrower is typically a business, with trade references and no single asset securing the loan by default. An auto loan agreement is specifically for financing a vehicle purchase, with the vehicle itself as collateral. Use the one that matches the actual loan.
Is this loan secured or unsecured by default?
Unsecured, unless the loan security field is set to secured and a specific collateral description is added. State the position explicitly rather than leaving it silent, since an unstated position can create disputes about what the parties actually intended.
Do I need a guarantor for a business loan?
Not necessarily — many business loans are made without one. If a guarantor is required, name them specifically and state their liability rather than using a clause that promises a mechanism and then disclaims it.
Why does the arbitration clause need to name a specific organization?
An arbitration clause that just says the parties 'may submit to arbitration chosen by both parties' names no rules, administrator or location, which makes it difficult to enforce or even begin the process if a dispute actually arises. Naming a specific administrator and seat avoids that problem.
Is there a maximum interest rate I can charge?
Yes — state usury laws cap the maximum lawful interest rate, and the cap varies by state and by the type of lender. Check your state's specific limit before finalizing the interest rate or default rate in this agreement.
What is a set-off right and why does it matter?
A set-off right lets the lender apply funds the borrower holds in other accounts at the same bank against the outstanding debt after a default, without a separate court order. It's a standard commercial-lending protection that the free source document does not include.
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Disclaimer
This template and guide are for general information only. They are not legal or financial advice, and no attorney or regulator has reviewed or approved them. Commercial lending terms, usury limits, and arbitration enforceability vary by state — confirm the specific requirements that apply before relying on this document.
