Commercial Loan Agreements: A Technical Guide for Microfinance Institutions
Oct 2006, Cleary, Gottlieb, Steen & Hamilton LLP
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This guidebook introduces borrowing microfinance institutions to important provisions of a standard commercial bank loan agreement.

This guidebook introduces borrowing microfinance institutions (MFIs or borrowers) to important provisions of a standard commercial bank loan agreement.

The guide book:

• Offers tips for drafting standard clauses;
  
• Helps borrowers understand:
  
  • The risks associated with some of the provisions of a loan agreement,
    
  • Departures from generally accepted provisions that may negatively affect their interests;
  
  
• Explains the difference between:
  
  • A loan agreement and a promissory note;
    
  • The way common law and civil law handle terms and practices.

The guide states that:

• A loan agreement is a contract between the lender and the borrower that sets forth the terms and conditions of the loan and the rights and obligations of both parties;
  
• Although a draft loan agreement comprises standard loan provisions, some clauses can be customized to reflect the individual features of the lending relationship;
  
• Borrowers need to negotiate loan terms to ensure that funds will be available to them when needed;
  
• Common law and civil law are different in their approaches to the rights of creditors and debtors;
  
• Borrowers should seek legal counsel whether the law governing the loan agreement follows common law or civil law principles and what the related implications are.

The guide book describes:

• Various loan agreement structures and standard provisions, including those relating to representations and warranties, covenants, events of default, remedies, enforcement and casualties;
  
• Commercial loan agreements and certain alternative loan products;
  
• Loan agreement terminology;
  
• The risks and benefits of some common loan structures.

13 Apr 2011

jrdjyck jrdtrdyt Kenya

16 Oct 2010

Gopakumar gopalakrishnan India

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