How to read a business loan agreement?
Before we make the decision to take a business loan, we should always think carefully about it. When we are determined, let’s not sign a contract without reading it first. It is worth knowing what are the consequences of her signing, which we agree to. How should we read a loan agreement so that we do not miss any important records?
The loan agreement binds the lender to the borrower, specifying the obligations and rights of each of the parties. Then, when we want to take out a loan, signing a contract is essential, unless we take it out of the family for a small sum. In all other cases, the loan should be approved by a proper contract.
Why is it worth reading a loan agreement?
Unfortunately, many of us make a serious mistake when borrowing – we do not read the contract. We usually assume that there are no records in the contract that we did not know about before. In addition, here is the importance of haste – we want to sign a contract as soon as possible and receive money , rather than delving into a complicated contract. Of course, the very matter of the difficult language used in the contracts is not without significance.
However, we should not give up the loan agreement – thanks to it we will be able to find out what we are writing, generally speaking. It is worth remembering that the contract itself is not the only document to which we should pay attention. Other documents are also applicable, including the table of commissions and fees or loan regulations.
The business loan agreement should contain the following information:
• defining the parties to the loan agreement
• the amount of the loan
• loan repayment rules
• repayment date of the loan along with the repayment schedule
• the annual interest rate with the terms of its change
• commissions and other fees related to the conclusion of the contract
• the total cost of the loan
• the method of securing the repayment of the loan , if it is needed
• the effects of early repayment of the loan
• the date, manner and consequences of withdrawing from the loan agreement
• consequences of breaching contractual provisions, such as the lack of timely repayment
Pay special attention to the provisions regarding interest rates and other borrowing costs, as well as the rules that may change their amount. The biggest threat is contracts with so-called abusive clauses, which are forbidden, but now they are very rare, mainly in little-known, not very well-known business loan companies. By cutting a business loan in a good company that has positive customer feedback, we have nothing to fear.