[{"data":1,"prerenderedAt":516},["ShallowReactive",2],{"document-line-of-credit-agreement-D13360":3},{"document":4,"label":21,"preview":11,"thumb":22,"thumb600":23,"description":5,"descriptionCustom":6,"apiDescription":5,"pages":8,"extension":10,"parents":24,"breadcrumb":28,"related":36,"customDescModule":179,"customdescription":6,"mdFm":180,"mdProseHtml":515},{"description":5,"descriptionCustom":6,"label":7,"pages":8,"size":9,"extension":10,"preview":11,"thumb":12,"svgFrame":13,"seoMetadata":14,"parents":16,"keywords":20},"LINE OF CREDIT AGREEMENT This Line of Credit Agreement (the \"Agreement\") is effective [DATE], BETWEEN: [LENDER NAME], (the \"Lender\"), an individual with their main address located at OR a Company organized and existing under the laws of the [State/Province] of [STATE/PROVINCE], with its head office located at: [COMPLETE ADDRESS] AND: [BORROWER NAME], (the \"Borrower\"), an individual with their main address located at OR a company organized and existing under the laws of the [State/Province] of [STATE/PROVINCE], with its head office located at: [COMPLETE ADDRESS] Collectively, the Lender and Borrower shall be referred to as the \"Parties.\" WHEREAS, the Borrower wishes to obtain from the Lender a line of credit facility of up to [SPECIFY AMOUNT] (the \"Line of Credit\"). WHEREAS, in connection with the Line of Credit, the Borrower entered a Promissory Note with the Lender (the \"Note\") to borrow up to [SPECIFY AMOUNT]. WHEREAS, in full reliance on the representations made by the Borrower in this Agreement and the Line of Credit Documents, the Lender is willing to extend such financing to the Borrower upon the terms, covenants and conditions contained in this Agreement and in the Line of Credit Documents. NOW, THEREFORE, the Parties agree as follows: DEFINITIONS \"Agreement\" means this Line of Credit Agreement and any amendment/modifications made thereto from time to time by the Parties hereto and shall include the Schedule hereto. \"Note\" shall mean reference to the Promissory Note issued by the Borrower to the Lender to evidence the Line of Credit and in the form of Exhibit A annexed hereto and made a part hereof. \"Parties\" means the Lender and the Borrower who are party to this Agreement. \"Maturity Date\" shall mean the third anniversary of the Effective Date, being the date that all sums evidenced by the Note shall be due and payable. \"Exhibits\" means and includes the Exhibits attached hereto and forming an integral part of the Agreement. \"Material Adverse Event\" means any circumstance or event that, individually or collectively with other circumstances or events, may reasonably be expected to have a material adverse effect on the financial condition or Business of the Borrower, as now conducted or as proposed to be conducted. \"Line of Credit\" shall mean the financing provided by the Lender to the Borrower under the terms of this Agreement in the maximum principal amount of [SPECIFY AMOUNT]. \"Line of Credit Documents\" shall refer to this Agreement and the Note. All of the Line of Credit Documents are incorporated herein by reference. \"Default\" shall mean the occurrence and continuance of any of the events listed in this Agreement. \"Governmental Authority\" shall mean the Government of the United States, any state, province or political subdivision thereof, any other foreign country, any multi-national organization or body and any entity exercising executive, judicial, legislative, police, taxing, regulatory or administrative authority or power of any nature. AMOUNT AND TERMS OF LINE OF CREDIT Line of Credit. On the Effective Date, the Lender shall provide the Borrower with a Line of Credit up to the maximum amount of [SPECIFY AMOUNT], representing the maximum aggregate amount of the advances of funds from the Line of Credit (each an \"Advance\") that may be outstanding and any time under the Line of Credit (the \"Principal Indebtedness\"), from which the Borrower may draw down, at any time and from time to time during the period from and including the date of this Line of Credit through the day immediately preceding the Maturity Date, a principal amount not to exceed at any one time outstanding, as to all such Advances in the aggregate, the Principal Indebtedness. The entire Principal Indebtedness of the Line of Credit shall be due and payable on the earlier to occur of (a) the occurrence and continuation of a Default hereunder, or (b) the Maturity Date (as the same may be extended as herein provided). Interest. Interest shall be payable on the outstanding Principal Indebtedness at the rate of [PERCENTAGE] per annum (the \"Interest Rate\"), payable semi-annually in arrears on [SPECIFY MONTHS] in each year. Interest at the Interest Rate on all outstanding Advances shall be payable with the then outstanding Principal Indebtedness on the Maturity Date. Borrowing Notice. All Advances, other than the Initial Advance, shall be made by the Lender on a date which shall be not later than [NUMBER OF DAYS] days following written request therefore from the Borrower. Prepayment. The Borrower may prepay, in whole or in part, the Principal Indebtedness of the Line of Credit, and all Interest accrued on any outstanding Advances at any time prior to the Maturity Date, without the prior written consent of the Lender and without payment of any premium or penalty. Extension of Maturity Date. At any time prior to the Maturity Date, upon mutual written consent of the Borrower and the Lender, the Maturity Date may be extended for up to an additional three-year period, in which case the \"Maturity Date\" shall mean such later date as is agreed upon by the Parties. ADDITIONAL AGREEMENTS OF THE BORROWER Conditions Precedent to Disbursement at Closing. Prior to the disbursement of any of the proceeds of the Line of Credit to or for the account of the Borrower at the closing of the Line of Credit, and as a condition precedent to such disbursement, all of the conditions set forth below must be satisfied as determined by the Lender, in the Lender's sole discretion. Line of Credit Documents. On the Effective Date, the Borrower shall execute and deliver to the Lender, a counterpart of all Line of Credit Documents in favor of the Lender. Miscellaneous Items. The Borrower shall deliver to the Lender such other items, documents and evidences pertaining to the Line of Credit as may reasonably be requested by the Lender. REPRESENTATIONS AND WARRANTIES The Borrower does hereby represent and warrant to the Lender, as of the date hereof (except as to any representation or warranty which specifically relates to another date), as follows (provided that any fact or item disclosed with respect to one representation or warranty shall be deemed to be disclosed with respect to each other representations or warranty, but only to the extent that the applicability of such fact or item with respect to such other representation or warranty can reasonably be inferred from the disclosure with respect to such fact or item contained in the disclosure schedules of the Borrower): Authority to Execute and Perform Agreements. The Borrower has the full legal right and power and all authority and approval required to enter into, execute and deliver this Agreement and the other Line of Credit Documents and to perform fully its obligations hereunder and thereunder. The execution and delivery of this Agreement and the other Line of Credit Documents by the Borrower and the consummation of the transactions contemplated hereby and thereby have been or will be duly and validly authorized by all necessary individual and corporate action, and no other proceedings on the part of the Borrower are necessary to authorize this Agreement and the other Line of Credit Documents or to consummate the transactions so contemplated. This Agreement and the other Line of Credit Documents have all been or will be duly executed and delivered and are the valid and binding obligations of the Borrower enforceable against the Borrower in accordance with their terms, except as may be limited by bankruptcy, moratorium, insolvency or other similar laws generally affecting the enforcement of creditors' rights. No Breach",null,"Line Of Credit Agreement","9",513,"doc","https://templates.business-in-a-box.com/imgs/1000px/line-of-credit-agreement-D13360.png","https://templates.business-in-a-box.com/imgs/250px/13360.png","https://templates.business-in-a-box.com/svgs/docviewerWebApp1.html?v6#13360.xml",{"title":15,"description":6},"line of credit agreement",[17],{"label":18,"url":19},"Business Plan Kit","/templates/business-plan-kit/","line credit agreement","Line Of Credit Agreement Template","https://templates.business-in-a-box.com/imgs/400px/13360.png","https://templates.business-in-a-box.com/imgs/600px/13360.png",[25,17],{"label":26,"url":27},"Templates","/templates/",[29,30,33],{"label":26,"url":27},{"label":31,"url":32},"Finance & Accounting","/templates/finance-accounting/",{"label":34,"url":35},"Business Financing & Loans","/templates/business-financing-and-loans/",[37,40,44,48,52,56,60,64,68,72,76,80,84,101,118,134,150,164],{"label":7,"url":38,"thumb":39,"extension":10},"/template/line-of-credit-agreement-D14003","https://templates.business-in-a-box.com/imgs/250px/14003.png",{"label":41,"url":42,"thumb":43,"extension":10},"Promissory Note Line of Credit","/template/promissory-note-line-of-credit-D435","https://templates.business-in-a-box.com/imgs/250px/435.png",{"label":45,"url":46,"thumb":47,"extension":10},"Cancellation of Credit Line","/template/cancellation-of-credit-line-D182","https://templates.business-in-a-box.com/imgs/250px/182.png",{"label":49,"url":50,"thumb":51,"extension":10},"Revolving Credit Agreement","/template/revolving-credit-agreement-D14051","https://templates.business-in-a-box.com/imgs/250px/14051.png",{"label":53,"url":54,"thumb":55,"extension":10},"Credit Agreement","/template/credit-agreement-D416","https://templates.business-in-a-box.com/imgs/250px/416.png",{"label":57,"url":58,"thumb":59,"extension":10},"Credit Repair Agreement","/template/credit-repair-agreement-D13946","https://templates.business-in-a-box.com/imgs/250px/13946.png",{"label":61,"url":62,"thumb":63,"extension":10},"Credit Note","/template/credit-note-D13639","https://templates.business-in-a-box.com/imgs/250px/13639.png",{"label":65,"url":66,"thumb":67,"extension":10},"Credit Policy","/template/credit-policy-D12633","https://templates.business-in-a-box.com/imgs/250px/12633.png",{"label":69,"url":70,"thumb":71,"extension":10},"Credit Memo","/template/credit-memo-D261","https://templates.business-in-a-box.com/imgs/250px/261.png",{"label":73,"url":74,"thumb":75,"extension":10},"Denial of Credit","/template/denial-of-credit-D264","https://templates.business-in-a-box.com/imgs/250px/264.png",{"label":77,"url":78,"thumb":79,"extension":10},"Restrictions on Credit","/template/restrictions-on-credit-D278","https://templates.business-in-a-box.com/imgs/250px/278.png",{"label":81,"url":82,"thumb":83,"extension":10},"Request for Payment_Credit Line Exceeded","/template/request-for-payment_credit-line-exceeded-D230","https://templates.business-in-a-box.com/imgs/250px/230.png",{"description":85,"descriptionCustom":6,"label":86,"pages":87,"size":9,"extension":10,"preview":88,"thumb":89,"svgFrame":90,"seoMetadata":91,"parents":93,"keywords":92,"url":100},"LOAN AGREEMENT This Loan Agreement (\"Agreement\") is made and effective the [DATE], BETWEEN: [LENDER NAME] (the \"Lender\"), an individual with his main address located at OR a corporation organized and existing under the laws of the [State/Province] of [STATE/PROVINCE], with its head office located at: [COMPLETE ADDRESS] AND: [YOUR COMPANY NAME] (the \"Borrower\"), a corporation organized and existing under the laws of the [State/Province] of [STATE/PROVINCE], with its head office located at: [YOUR COMPLETE ADDRESS] Promise to Pay Within [NUMBER] months from today, Borrower promises to pay to Lender the sum of [AMOUNT], and interest and other charges stated below. Responsibility Although this Agreement may be signed below by more than one person, Borrower understands that both parties are individuals responsible for paying back the full amount. Breakdown of Loan Amount of Loan: Other (Describe): Amount Financed: Finance Charge: Total of Payments: Annual Rate: Repayment Borrower will repay the amount of this note in [NUMBER] equal uninterrupted monthly installments of [AMOUNT] each on the [DAY] of each month starting on the [DATE], and ending on [DATE]. Prepayment Borrower has the right to prepay the whole outstanding amount at any time","Loan Agreement","2","https://templates.business-in-a-box.com/imgs/1000px/loan-agreement-D417.png","https://templates.business-in-a-box.com/imgs/250px/417.png","https://templates.business-in-a-box.com/svgs/docviewerWebApp1.html?v6#417.xml",{"title":92,"description":6},"loan agreement",[94,96,99],{"label":31,"url":95},"finance-accounting",{"label":97,"url":98},"Business Loans","business-loan",{"label":97,"url":98},"/template/loan-agreement-D417",{"description":102,"descriptionCustom":6,"label":103,"pages":104,"size":105,"extension":10,"preview":106,"thumb":107,"svgFrame":108,"seoMetadata":109,"parents":110,"keywords":116,"url":117},"PROMISSORY NOTE This Promissory Note (the \"Note\") is made and effective the [DATE], BETWEEN: [LENDER NAME] (the \"Lender\"), an individual with his main address located at OR a corporation organized and existing under the laws of the [State/Province] of [STATE/PROVINCE], with its head office located at: [COMPLETE ADDRESS] AND: [YOUR COMPANY NAME] (the \"Borrower\"), a corporation organized and existing under the laws of the [State/Province] of [STATE/PROVINCE], with its head office located at: [YOUR COMPLETE ADDRESS] TERMS FOR VALUE RECEIVED, the Borrower promises to pay to the order of Lender, at its principal office located at [ADDRESS], or at such other place that is designated in writing by the holder hereof, the principal sum of [AMOUNT], together with all charges and interest herein provided, payable at the rate and in the manner hereinafter set forth: Borrower shall make monthly payments of principal and interest at the rate of [%] per annum based upon an amortization of [NUMBER] months. Monthly payments shall be due on or before the first day of each month with the first payment being due on or before [DATE]. If not sooner paid, all amounts due under this Note, including principal, interest and other charges shall be due and payable in full on or before the first day of [MONTH], [YEAR] (the \"Maturity Date\"). Time is of the essence of the payment obligations hereunder and each monthly payment shall be due and payable on or before the first day of each month. This Note is and will be secured by a certain first priority security interest in all of the tangible and intangible property of the Borrower, to be recorded in all applicable governmental offices. The parties shall execute a separate security agreement, in form and substance acceptable to the Lender in all respects. Borrower agrees to execute any such security agreements presented by the Lender or other documents required by the Lender in order to perfect its security interest in the above described property. Said Security Agreement and any other instruments and documents executed in connection with or given as security for this Note shall hereinafter be referred to collectively as the \"Loan Documents.\" All of the terms, covenants, Conditions, representations and warranties contained in the Loan Documents are hereby made part of this Note to the same extent and with the same force and effect as if fully set forth herein. If all or any portion of any payment due hereunder is not received by the Lender within [NUMBER] calendar days after the date when such payment is due, Borrower shall pay a late charge equal to [%] of such payment, such late charge to be immediately due and payable without demand by Lender. Borrower shall have the right to prepay all (but not a portion) of the indebtedness evidenced by this Note at any time, by paying the Lender an amount equal to the sum of (I) the principal balance then outstanding, (ii) all interest accrued to the date of such prepayment, (iii) all interest calculated through the Maturity Date, and (iv) any late charge or charges then due and owing. If any payment under this Note is not paid in full by the [DAY] of any month during the term hereof or if the entire amount due as represented by this Note is not paid in full on or before the Maturity Date, or should default be made in the performance or observation of any of the terms, covenants, or conditions contained in the Loan Documents, or if any representation or warranty contained in the Loan Documents is breached or is or becomes untrue, this Note shall be in default, and the entire principal amount outstanding hereunder, accrued interest thereon, all late charges, if any, and any and all other charges due hereunder, shall, at Lender's option, immediately become due and payable, without further notice, the giving of such notice being expressly waived by the Borrower","Promissory Note","3",39,"https://templates.business-in-a-box.com/imgs/1000px/promissory-note-D434.png","https://templates.business-in-a-box.com/imgs/250px/434.png","https://templates.business-in-a-box.com/svgs/docviewerWebApp1.html?v6#434.xml",{"title":6,"description":6},[111,112,113],{"label":31,"url":95},{"label":97,"url":98},{"label":114,"url":115},"Promissory Notes","promisory-note","promissory note","/template/promissory-note-D434",{"description":119,"descriptionCustom":6,"label":120,"pages":121,"size":9,"extension":10,"preview":122,"thumb":123,"svgFrame":124,"seoMetadata":125,"parents":127,"keywords":126,"url":133},"SECURED LUMP-SUM PROMISSORY NOTE AGREEMENT This Secured Lump-Sum Promissory Note Agreement (the \"Agreement\") is effective [DATE], BETWEEN: [FIRST PARTY NAME], (the \"Issuer\") a company organized and existing under the laws of the [State/Province] of [STATE/PROVINCE] with its head office located at/Individual having an address at: [YOUR COMPLETE ADDRESS] AND: [SECOND PARTY NAME], (the \"Holder\") company organized and existing under the laws of the [State/Province] of [STATE/PROVINCE] with its head office located at/Individual having an address at: [YOUR COMPLETE ADDRESS] FOR VALUE RECEIVED, the undersigned Issuer hereby promises to pay to the order of the Holder, the maximum Principal Amount of [PRINCIPAL AMOUNT] together with interest on the unpaid Principal Amount (as defined in this Agreement) outstanding from time to time at the rate (or rates) hereafter specified, and all other sums which may be owing to the Holder by the Issuer hereunder. The terms of the Note are as follows: MATURITY DATE AND PAYMENT TERMS This Note will mature, and be due and payable in full, on [DATE] (the \"Maturity Date\") and shall be paid in the lump sum amount of [LUMP SUM AMOUNT TO BE PAID]. INTEREST From and after the date hereof, all outstanding principal of this Note will bear simple interest at the rate of [PERCENT OF INTEREST] per annum. On the date that is [NUMBER OF DAYS] days after the date of this Note, the Issuer shall pay the then accrued interest on this Note. Upon the occurrence and during the continuance of any Event of Default (as hereinafter defined) under this Note, all outstanding principal of this Note shall bear interest at the rate of [PERCENT OF INTEREST] per annum. All outstanding principal and accrued but unpaid interest on this Note shall be payable on the Maturity Date. SECURITY This Note is Secured by a Security Agreement on the Issuer's Property, described as [PROPERTY DESCRIPTION], hereinafter known as the \"Security,\" which shall transfer to the possession and ownership of the Holder immediately in case of Acceleration. The Security may not be sold or transferred without the Holder's consent until the Maturity Date. If the Issuer breaches this provision, the Holder may declare all sums due under this Note immediately due and payable, unless prohibited by applicable law. The Holder shall have the sole option to accept the Security as full payment for the Principal Amount without further liabilities or obligations. If the market value of the Security does not exceed the Principal Amount, the Issuer shall remain liable for the balance due while accruing interest at the maximum rate allowed by law. PREPAYMENT The Issuer may prepay this Note prior to the Maturity Date, without premium or penalty, upon written notice to the Holder. EVENTS OF DEFAULT The occurrence of any one or more of the following events shall constitute an \"Event of Default\" under this Note: the failure of the Issuer to pay any sum due under this Note when due, whether by demand or otherwise, and such sum remains unpaid for five (5) days after the Due Date; and any other Event of Default described in the Security Agreement that might be signed between the Parties regarding the Property that is pledged as collateral to the loan. RIGHTS AND REMEDIES UPON DEFAULT ","Secured Lumpsum Promissory Note Agreement","4","https://templates.business-in-a-box.com/imgs/1000px/secured-lumpsum-promissory-note-agreement-D13041.png","https://templates.business-in-a-box.com/imgs/250px/13041.png","https://templates.business-in-a-box.com/svgs/docviewerWebApp1.html?v6#13041.xml",{"title":126,"description":6},"secured lumpsum promissory note agreement",[128,130],{"label":18,"url":129},"business-plan-kit",{"label":131,"url":132},"Business Procedures","business-procedures","/template/secured-lumpsum-promissory-note-agreement-D13041",{"description":135,"descriptionCustom":6,"label":136,"pages":137,"size":138,"extension":10,"preview":139,"thumb":140,"svgFrame":141,"seoMetadata":142,"parents":143,"keywords":148,"url":149},"CONVERTIBLE NOTE AGREEMENT This Convertible Note Agreement (\"Agreement\") is made and effective the [DATE], BETWEEN: [YOUR COMPANY NAME] (the \"Company\"), a corporation organized and existing under the laws of the [State/Province] of [STATE/PROVINCE], with its head office located at: [YOUR COMPLETE ADDRESS] AND: [NOTE HOLDERS NAME] (the \"Note Holders\"), a corporation organized and existing under the laws of the [State/Province] of [STATE/PROVINCE], with its head office located at: [COMPLETE ADDRESS] WHEREAS, Note Holders are willing to lend Company the aggregate sum of [AMOUNT] be evidenced by [%] Convertible Promissory Notes. In consideration of the mutual covenants and conditions herein contained, the parties hereby agree, represent and warrant as follows: Issue of Notes The Company will authorize the issue of its [%] Convertible notes (hereinafter called \"Notes\") in the aggregate principal amount of [amOUNT] to be dated [date] to mature on [date] to bear interest on the unpaid principal thereof at the rate of [%] per annum until maturity, payable on the [day] of [month] in each year, commencing on [date], [year], and after maturity at the rate of [%] per annum until paid, and to be substantially in the form of Exhibit A attached hereto. For the purposes of calculating interest for any period for which the interest shall be payable, such interest shall be calculated on the basis of a [number] day month and a [number] day year. The Company will promptly and punctually pay to Note Holders or their nominee the interest on any of the Notes held by Note Holders without presentment of the Notes. In the event that Note Holders shall sell or transfer any of the Notes, they shall notify the Company of the name and address of the transferee. In the event the Company defaults on any installment of interest or principal, then any Holder of these Notes may, at his option, without notice, declare the entire principal and the interest accrued thereon immediately due and payable and may proceed to enforce the collection thereof. All the Notes shall contain a confession of judgment provision. The Company will also authorize the issue of [number] shares of its common stock (hereinafter called \"The Stock\") and will authorize the issuance of and reserve for such purchase such a number of additional shares of common stock (hereinafter called the \"Conversion Stock\") as may from time to time be the maximum number required for issuance upon conversion of the Notes pursuant to the conversion privileges hereinafter stated. Sale and Purchase of Notes and Stock The Company will sell the Notes to the purchasers listed on Exhibit A, each of whom agrees to purchase the principal amount of the Notes set opposite their names, subject to the terms and conditions hereof and in reliance upon the representations and warranties of the Company contained herein, at the purchase price of [%] of the principal amount. Representations and Warranties by the Company Company is a corporation duly organized and existing in good standing under the laws of the State of [state/province] has the corporate power to own its own property and to carry on in the business as it is now being conducted. Company has on its corporate records the names of the following individuals who each own [number] shares of common stock which constitute all the issue and outstanding capital stock of the Company as of this date. The Company has furnished to the Note Holders an Offering Circular which is attached hereto as Exhibit B. The financial statements contained therein are true and correct and have been prepared in accordance with generally accepted accounting principles consistently followed throughout the period indicated. There is no action or proceeding pending or, to the knowledge of the Company, threatened against the Company before any court or administrative agency, the determination of which might result in any material adverse change in the business of the Company. The Company has title to the respective properties and assets including the properties and assets reflected on the financial statement for the year ending [date] and which assets and properties are subject to no liens, mortgages, encumbrances or charges except a security interest to [specify]. The Company is not a party to any contract or agreement or subject to any restriction which materially and adversely affects its business, property or assets, or financial condition, and neither the execution nor delivery of this Agreement, nor the confirmation of the transactions contemplated herein, nor the fulfillment of the terms hereof, nor the compliance with the terms and provisions hereof and of the Notes, will conflict with or result in the breach of the terms, conditions or provisions or constitute a default, under the Articles of Incorporation or Code of Regulations of the Company or of any Agreement or instrument to which the Company is now a party. The Company has not declared, set aside, paid or made any dividend or other distributions with respect to its capital stock and has not made or caused to be made directly or indirectly, any payment or other distribution of any nature whatsoever to any of the holders of its capital stock except for regular salary payments for services rendered and the reimbursement of business expenses. All of the equipment and automobiles of the Company are in good condition and repair. There are no outstanding options or rights to purchase shares of the Company and no outstanding securities with the right of conversion into shares of the Company. The Company owns or possesses adequate licenses or other rights to use, all patents, trademarks, trade names, trade secrets, and copyrights used in its business. No one has asserted to the Company that its operations infringe on the patents, trademarks, trade secrets or other rights utilized in the operation of its business. Neither the Company nor any agent or employee acting in its behalf has offered the Notes or the Stock or any portion thereof for sale to or solicited in any offer to buy the same or any thereof from any person or persons other than the purchasers listed in the attached Exhibit A and [NUMBER] other persons, and neither the Company nor any agent or employee acting in its behalf will sell or offer for sale the Notes or Stock or any portion thereof to or solicit any offer to buy the Notes or the Stock from any person or persons so as to bring the issuance or sale thereof within the provisions of Section [NUMBER] of the [ACT]. Representations and Warranties by the Note Holders The Note Holders represent and warrant that: The Note Holders are subscribing for the Notes and Stock for investment purposes and not with the view to or for sale in connection with any distribution thereof and that they have no present intent to sell, give or otherwise transfer the Notes or Stock. The Note Holders state that they are and residents of the State of [state/province]. The Note Holders understand that this is a highly speculative investment in a Company which is insolvent both from a legal and an equity standpoint. Individuals represent and warrant that they have a net worth in excess of [amount] exclusive of their residences and that they are sophisticated investors who are knowledgeable about the [specify] business. Note Holders state that they will be active in the affairs of the business of the Company. Prepayment of the Notes Company shall have the right to make prepayments on principal of the Notes at any time on [number] days written notice. Such prepayment shall be accompanied by a payment of all accrued interest to date. There shall be no premium for the amount so prepaid. Conversion","Convertible Note Agreement","6",64,"https://templates.business-in-a-box.com/imgs/1000px/convertible-note-agreement-D870.png","https://templates.business-in-a-box.com/imgs/250px/870.png","https://templates.business-in-a-box.com/svgs/docviewerWebApp1.html?v6#870.xml",{"title":6,"description":6},[144,147],{"label":145,"url":146},"Legal Agreements","business-legal-agreements",{"label":145,"url":146},"convertible note agreement","/template/convertible-note-agreement-D870",{"description":151,"descriptionCustom":6,"label":152,"pages":153,"size":154,"extension":10,"preview":155,"thumb":156,"svgFrame":157,"seoMetadata":158,"parents":159,"keywords":162,"url":163},"SECURITY AGREEMENT This Security Agreement (the \"Agreement\") is made and effective [DATE], BETWEEN: [SECURED PARTY NAME] (the \" Secured Party\"), a corporation organized and existing under the laws of the [State/Province] of [STATE/PROVINCE], with its head office located at: [COMPLETE ADDRESS] AND: [YOUR COMPANY NAME] (the \"Debtor\"), a corporation organized and existing under the laws of the [State/Province] of [STATE/PROVINCE], with its head office located at: [YOUR COMPLETE ADDRESS] For value received, the undersigned Debtor, promises to pay to the order of [name], together with any other holder of this note (\"Secured Party\"), [amount], with interest at the rate of [%] per annum. Payment shall be made in successive equal monthly installments of [amount]. Each such Installment is payable on the [day] of each month, commencing on [date]. Recitals WHEREAS, the Secured Party has extended to the Debtor a certain loan as evidenced by a certain promissory note, in the original principal amount equal to [amount] dated on even date herewith (the \"Note\"); and WHEREAS, the Debtor wishes to grant a first priority security interest in and to all of the Debtor's tangible and intangible personal property pursuant to the terms hereof; NOW, THEREFORE, for and in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound hereby, the parties hereto covenant and agree as follows: DEFINITIONS The following terms shall have the meanings herein specified unless the context otherwise requires. Such definitions shall be equally applicable to the singular and plural forms of the terms defined: \"Contracts\" shall mean all contracts between the Debtor and one or more additional parties. \"Contract Rights\" shall mean all rights of the Debtor (including, without limitation, all rights to payment) under each Contract. \"Copyrights\" shall mean any [country] copyright to which the Debtor now or hereafter has title, as well as any application for a [country] copyright hereafter made by the Debtor. \"Equipment\" shall mean any \"equipment,\" as such term is defined in the [law or code] as in effect on the date hereof in the State of [state/province], now or hereafter owned by Debtor and, in any event, shall include, but shall not be limited to, all machinery, equipment, furnishings, fixtures and vehicles now or hereafter owned by the Debtor and any and all additions, substitutions and replacements of, any of the foregoing, wherever located, together with all attachments, components, parts, equipment and accessories installed thereon or affixed thereto. \"General Intangibles\" shall have the meaning assigned that term under the [LAW OR CODE] as in effect on the date hereof in the State of [state/province]. \"Goods\" shall have the meaning assigned that term under the [LAW OR CODE] as in effect on the date hereof in the State of [state/province]. \"Inventory\" shall mean all raw materials, workinprocess, and finished inventory of the Debtor of every type or description and all documents of title covering such inventory, and shall specifically include all \"inventory\" as such term is defined in the [law or code] as in effect on the date hereof in the State of [state/province], now or hereafter owned by the Debtor. \"Marks\" shall mean any trademarks and service marks now held or hereafter acquired by the Debtor, which are registered in the [country] Patent and Trademark Office, as well as any unregistered marks used by the Debtor in the [COUNTRY] and trade dress, including logos and/or designs, in connection with which any of these registered or unregistered marks are used. \"Obligations\" shall mean: (i) all indebtedness, obligations and liabilities (including, without limitation, guarantees and other contingent liabilities) of the Debtor to the Secured Party, including but not limited to the Note; (ii) any and all sums advanced by the Secured Party in order to preserve the Collateral or preserve its security interest in the Collateral; and (iii) in the event of any proceeding for the collection or enforcement of any indebtedness, obligations or liabilities of the Debtor referred to in clause (i), after an Event of Default shall have occurred and be continuing, the reasonable expenses of retaking, holding, preparing for sale or lease, selling or otherwise disposing or realizing on the Collateral, or of any exercise by the Collateral Agent of its rights hereunder, together with reasonable attorneys' fees and court costs. \"Patents\" shall mean any [country] patent to which the Debtor now or hereafter has title, as well as any application for a [country] patent now or hereafter made by Debtor. \"Proceeds\" shall have the meaning assigned that term under the [law or code] as in effect in the State of [state/province] on the date hereof or under other relevant law and, in any event, shall include, but not be limited to, (i) any and all proceeds of any insurance, indemnity, warranty or guaranty payable to the Secured Party or the Debtor from time to time with respect to any of the Collateral, (ii) any and all payments (in any form whatsoever) made or due and payable to the Debtor from time to time in connection with any requisition, confiscation, condemnation, seizure or forfeiture of all or any part of the Collateral by any governmental authority and (iii) any and all other amounts from time to time paid or payable under or in connection with any of the Collateral. \"Receivables\" shall mean any \"account\" as such term is defined in the [law or code] as in effect on the date hereof in the State of [STATE/PROVINCE], now or hereafter owned by Debtor and, in any event, shall include, but shall not be limited to, all of the Debtor's rights to payment for goods sold or leased or services performed by the Debtor, whether now in existence or arising from time to time hereafter, including, without limitation, rights evidenced by an account, note, contract, security agreement, or other evidence of indebtedness or security, together with (i) all security pledged, assigned, hypothecated or granted to or held by the Debtor to secure the foregoing; (ii) all of the Debtor's right, title and interest in and to any goods, the sale of which gave rise thereto; (iii) all guarantees, endorsements and indemnifications on, or of, any of the foregoing; (iv) all powers of attorney for the execution of any evidence of indebtedness or security or other writing in connection therewith; (v) all books, records, ledger cards and invoices relating thereto; (vi) all evidences of the filing of financing statements and other statements and the registration of other instruments in connection therewith and amendments thereto, notices to other creditors or secured parties, and certificates from filing or other registration officers; (vii) all credit information, reports and memoranda relating thereto and (viii) all other writings related in any way to the foregoing. GRANT OF SECURITY INTEREST The Debtor does hereby grant to the Secured Party a continuing security interest of first priority in all of the right, title and interest of the Debtor in, to and under all of the following property whether now existing or hereafter created or arising: ","Security Agreement","10",96,"https://templates.business-in-a-box.com/imgs/1000px/security-agreement-D915.png","https://templates.business-in-a-box.com/imgs/250px/915.png","https://templates.business-in-a-box.com/svgs/docviewerWebApp1.html?v6#915.xml",{"title":6,"description":6},[160,161],{"label":145,"url":146},{"label":145,"url":146},"security agreement","/template/security-agreement-D915",{"description":165,"descriptionCustom":6,"label":166,"pages":87,"size":9,"extension":10,"preview":167,"thumb":168,"svgFrame":169,"seoMetadata":170,"parents":172,"keywords":171,"url":178},"PERSONAL GUARANTEE This Personal Guarantee (the \"Agreement\") is effective [DATE], BETWEEN: [FIRST PARTY NAME] (the \"Guarantor\"), an individual with his main address located at: [YOUR COMPLETE ADDRESS] AND: [YOUR COMPANY NAME] (the \"Second Party\"), a company organized and existing under the laws of the [State/Province] of [STATE/PROVINCE], with its head office located at: [YOUR COMPLETE ADDRESS] I, [NAME OF GUARANTOR], residing at [COMPLETE ADDRESS], hereby personally and solidarity guarantee all of the obligations of [YOUR COMPANY NAME] and agree to be bound solidarity with [YOUR COMPANY NAME] for the prompt performance of [YOUR COMPANY NAME]'s obligations under that certain [SPECIFY] Agreement dated [DATE] (the \"Agreement\") between [YOUR COMPANY NAME] and [COMPANY NAME], including without limitation the payment of all goods, wares and merchandise as [YOUR COMPANY NAME] may from time to time select and purchase on credit from [COMPANY NAME], and hereby expressly renounce to the benefits of division and discussion. Furthermore, I agree that waive may extend the time for payment of any amounts owing to it by waive and/or may waive any default by waive without it in any way lessening or limiting my liability hereunder. Notwithstanding the foregoing, my guarantee hereunder to pay any and all amounts owing by [YOUR COMPANY NAME] to [COMPANY NAME] shall be limited to the sum of [AMOUNT] OR [%] of such outstanding amount.","Personal Guarantee","https://templates.business-in-a-box.com/imgs/1000px/personal-guarantee-D405.png","https://templates.business-in-a-box.com/imgs/250px/405.png","https://templates.business-in-a-box.com/svgs/docviewerWebApp1.html?v6#405.xml",{"title":171,"description":6},"personal guarantee",[173,174,175],{"label":31,"url":95},{"label":97,"url":98},{"label":176,"url":177},"Guaranties & Collateral","guaranties-collateral","/template/personal-guarantee-D405",false,{"seo":181,"reviewer":192,"legal_disclaimer":191,"quick_facts":196,"at_a_glance":198,"personas":202,"variants":227,"glossary":251,"clauses":288,"how_to_fill":339,"common_mistakes":380,"faqs":405,"industries":433,"comparisons":450,"diy_vs_lawyer":463,"jurisdictions":476,"related_template_ids_curated":497,"schema":502,"classification":503},{"meta_title":182,"meta_description":183,"primary_keyword":184,"secondary_keywords":185,"family":184,"is_canonical":191},"Line of Credit Agreement Template (Free Word)","Free line of credit agreement template covering commitment amount, interest rate, advance mechanics, repayment, covenants, and termination. Free Word and PDF download.","line of credit agreement template",[15,186,187,188,189,190],"business line of credit agreement","credit facility agreement template","working capital line of credit template","line of credit contract template","revolving credit facility template word",true,{"name":193,"credential":194,"reviewed_date":195},"Bruno Goulet","CEO, Business in a Box","2026-05-02",{"difficulty":197,"legal_review_recommended":191,"signature_required":191,"notarization_required":179},"advanced",{"what_it_is":199,"when_you_need_it":200,"whats_inside":201},"A Line of Credit Agreement is a legally binding contract between a lender and a borrower that establishes a revolving credit facility — setting the maximum commitment amount, interest rate, advance and repayment mechanics, financial covenants, fees, security, and termination conditions. This free Word download gives you a professionally structured template you can edit online and export as PDF for working-capital, equipment, or general business-financing purposes.\n","Use it when a lender and borrower are entering a revolving credit arrangement and need a single enforceable document governing every draw, repayment, and covenant obligation over the life of the facility. It is equally appropriate for private lender-to-business arrangements and formal inter-company credit lines.\n","Maximum commitment and availability mechanics, interest rate and fee schedule, advance request procedure, repayment and clean-up periods, affirmative and negative covenants, events of default, security and collateral provisions, representations and warranties, and termination conditions.\n",[203,207,211,215,219,223],{"title":204,"use_case":205,"icon_asset_id":206},"Small business owners","Formalizing a revolving credit facility with a private or community lender","persona-small-business-owner",{"title":208,"use_case":209,"icon_asset_id":210},"CFOs and finance directors","Documenting a working-capital line negotiated with a bank or credit union","persona-cfo",{"title":212,"use_case":213,"icon_asset_id":214},"Private lenders and family offices","Structuring a secured line of credit to a portfolio company or borrower","persona-investor",{"title":216,"use_case":217,"icon_asset_id":218},"Startup founders","Establishing a credit line alongside equity financing to preserve runway","persona-startup-founder",{"title":220,"use_case":221,"icon_asset_id":222},"Commercial real estate operators","Securing a revolving facility for property acquisition deposits and improvements","persona-real-estate-investor",{"title":224,"use_case":225,"icon_asset_id":226},"Equipment dealers and manufacturers","Offering a vendor-financed line of credit to business customers","persona-manufacturer",[228,232,235,238,242,245,248],{"situation":229,"recommended_template":230,"slug":231},"Revolving facility for general working-capital needs","Line of Credit Agreement","line-of-credit-agreement-D13360",{"situation":233,"recommended_template":86,"slug":234},"Single lump-sum loan with fixed repayment schedule","loan-agreement-D417",{"situation":236,"recommended_template":237,"slug":234},"Short-term bridge loan between financing events","Bridge Loan Agreement",{"situation":239,"recommended_template":240,"slug":241},"Secured loan backed by specific equipment or assets","Secured Loan Agreement","secured-lumpsum-promissory-note-agreement-D13041",{"situation":243,"recommended_template":136,"slug":244},"Convertible note for a startup round","convertible-note-agreement-D870",{"situation":246,"recommended_template":247,"slug":234},"Personal loan between individuals","Personal Loan Agreement",{"situation":249,"recommended_template":103,"slug":250},"Promissory note documenting a simple debt obligation","promissory-note-D434",[252,255,258,261,264,267,270,273,276,279,282,285],{"term":253,"definition":254},"Revolving Credit Facility","A credit arrangement where the borrower can draw, repay, and redraw up to a maximum commitment amount repeatedly during the facility term.",{"term":256,"definition":257},"Commitment Amount","The maximum aggregate principal that the lender agrees to make available to the borrower at any one time under the facility.",{"term":259,"definition":260},"Availability","The portion of the commitment that the borrower can draw on at a given moment — calculated as the commitment amount minus the current outstanding balance.",{"term":262,"definition":263},"Advance Request","A formal written notice from the borrower to the lender requesting a draw of funds, specifying the amount and requested disbursement date.",{"term":265,"definition":266},"Clean-Up Period","A provision requiring the borrower to reduce the outstanding balance to zero for a specified number of consecutive days each year, confirming the facility is being used for short-term working capital rather than permanent financing.",{"term":268,"definition":269},"Covenant","A contractual obligation placed on the borrower — either requiring specific actions (affirmative) or prohibiting certain activities (negative) — to protect the lender's position.",{"term":271,"definition":272},"Event of Default","A defined circumstance — such as missed payment, covenant breach, or insolvency — that entitles the lender to accelerate repayment and enforce security.",{"term":274,"definition":275},"Acceleration","The lender's right, triggered by an event of default, to declare the entire outstanding balance immediately due and payable rather than on the original repayment schedule.",{"term":277,"definition":278},"Security Interest","A legal claim granted by the borrower to the lender over specific assets — accounts receivable, inventory, or equipment — as collateral for the facility.",{"term":280,"definition":281},"SOFR (Secured Overnight Financing Rate)","The benchmark interest rate that replaced USD LIBOR for most US dollar credit facilities, published daily by the Federal Reserve Bank of New York.",{"term":283,"definition":284},"Commitment Fee","A periodic fee charged on the unused portion of the credit commitment, compensating the lender for keeping funds available even when not drawn.",{"term":286,"definition":287},"Drawdown","The act of borrowing funds under the facility; each drawdown increases the outstanding balance and begins accruing interest from the disbursement date.",[289,294,299,304,309,314,319,324,329,334],{"name":290,"plain_english":291,"sample_language":292,"common_mistake":293},"Parties, Recitals, and Defined Terms","Identifies the lender and borrower as legal entities, states the purpose of the facility, and defines every capitalized term used throughout the agreement.","This Line of Credit Agreement (the 'Agreement') is entered into as of [DATE] between [LENDER LEGAL NAME], a [STATE/PROVINCE] [ENTITY TYPE] ('Lender'), and [BORROWER LEGAL NAME], a [STATE/PROVINCE] [ENTITY TYPE] ('Borrower'). The defined terms used herein have the meanings set out in Schedule A.","Using trade names instead of registered legal entity names. If the entity name on the agreement doesn't match the security filing or bank records, enforcing the security interest or pursuing recovery becomes procedurally complicated.",{"name":295,"plain_english":296,"sample_language":297,"common_mistake":298},"Commitment Amount and Availability","States the maximum credit limit, how availability is calculated, and any borrowing base or concentration limits that reduce what the borrower can draw.","Lender hereby establishes a revolving line of credit in favor of Borrower in the maximum principal amount of $[AMOUNT] (the 'Commitment'). Availability at any time equals the Commitment minus the aggregate outstanding principal of all Advances.","Omitting a borrowing base formula when the facility is tied to receivables or inventory. Without one, the lender has no contractual mechanism to reduce availability as the collateral base shrinks.",{"name":300,"plain_english":301,"sample_language":302,"common_mistake":303},"Advance Procedure","Specifies how the borrower requests a draw — the required notice period, minimum advance amounts, the form of the advance request, and the lender's disbursement timeline.","Borrower may request an Advance by delivering a written Advance Request to Lender no later than [2] Business Days prior to the requested disbursement date. Each Advance shall be in a minimum amount of $[MINIMUM AMOUNT]. Lender shall disburse approved Advances to Borrower's account at [BANK NAME], Account No. [XXXXXXXX].","Leaving the advance procedure silent on what happens if the lender disputes the request. Without a defined cure or dispute process, a rejected advance becomes an immediate litigation trigger.",{"name":305,"plain_english":306,"sample_language":307,"common_mistake":308},"Interest Rate and Calculation","Sets the applicable interest rate — fixed or floating — the benchmark it is tied to, the spread, and the day-count convention used to calculate accrued interest.","Outstanding Advances shall bear interest at a per annum rate equal to [SOFR / Prime Rate / Fixed Rate of X%] plus [SPREAD]%, calculated on the basis of a 365-day year (or 360-day year for SOFR-based facilities) on the actual number of days elapsed. Interest accrues daily and is payable on the [1st] day of each calendar month.","Failing to include a benchmark replacement provision. If the named benchmark (e.g., SOFR) is discontinued, the agreement needs a fallback rate — otherwise reprice negotiations become contentious or legally ambiguous.",{"name":310,"plain_english":311,"sample_language":312,"common_mistake":313},"Fees","Lists every fee the borrower owes the lender: commitment fee on the undrawn balance, origination fee, annual renewal fee, and any prepayment or early-termination fee.","Borrower shall pay to Lender: (a) a Commitment Fee equal to [X]% per annum on the average daily unused portion of the Commitment, payable quarterly; (b) an Origination Fee of $[AMOUNT] due on the Closing Date; and (c) an Annual Renewal Fee of $[AMOUNT] payable on each anniversary of the Closing Date.","Omitting the commitment fee entirely on small private facilities. Lenders who skip it lose compensation for holding capital available during periods when the borrower draws nothing.",{"name":315,"plain_english":316,"sample_language":317,"common_mistake":318},"Repayment, Clean-Up Period, and Maturity","Defines the repayment mechanics — interest-only or principal-plus-interest — the clean-up period requirement, and the final maturity date on which all outstanding amounts become due.","Borrower shall repay each Advance on or before the Maturity Date of [DATE]. Borrower shall repay all outstanding Advances in full for a period of not less than [30] consecutive days during each calendar year (the 'Clean-Up Period'). All outstanding principal, accrued interest, and fees are due and payable on the Maturity Date.","No clean-up period on a working-capital facility. Without one, a short-term line quietly converts into permanent financing, and the lender loses the legal and tax distinction between the two.",{"name":320,"plain_english":321,"sample_language":322,"common_mistake":323},"Affirmative and Negative Covenants","Requires the borrower to maintain certain financial ratios, provide periodic reporting, and carry insurance (affirmative); and prohibits additional indebtedness, asset sales, or change of control without lender consent (negative).","Borrower covenants to: (a) maintain a Debt Service Coverage Ratio of not less than [1.25:1.00]; (b) deliver quarterly financial statements within [45] days of quarter-end; and (c) maintain general liability insurance of not less than $[AMOUNT]. Borrower shall not, without Lender's prior written consent: (i) incur additional indebtedness exceeding $[THRESHOLD]; (ii) sell or encumber material assets; or (iii) permit a Change of Control.","Setting financial covenants without headroom above current ratios. A covenant set at the borrower's exact current ratio triggers default on the first quarter of any softness, even if the underlying business is healthy.",{"name":325,"plain_english":326,"sample_language":327,"common_mistake":328},"Events of Default and Remedies","Lists the specific events — missed payment, covenant breach, insolvency, material misrepresentation — that constitute a default, and grants the lender the right to accelerate the loan and enforce security.","Each of the following constitutes an Event of Default: (a) failure to pay any amount due within [5] Business Days of its due date; (b) breach of any covenant not cured within [30] days of written notice; (c) insolvency, bankruptcy filing, or assignment for the benefit of creditors; or (d) any material adverse change in the Borrower's financial condition. Upon an Event of Default, Lender may declare all Advances immediately due and payable and enforce any security interest.","No cure period for covenant breaches. Automatic default on a first technical breach — with no opportunity to remedy — is commercially unreasonable and courts may decline to enforce accelerated remedies on that basis.",{"name":330,"plain_english":331,"sample_language":332,"common_mistake":333},"Security and Collateral","Describes the assets pledged as collateral, the lender's security interest, and the borrower's obligation to execute and register any documents needed to perfect that interest.","To secure the Borrower's obligations hereunder, Borrower grants to Lender a first-priority security interest in all present and after-acquired [accounts receivable / inventory / equipment / general intangibles] of Borrower (the 'Collateral'). Borrower shall execute and deliver such UCC financing statements, PPSA registrations, or other documents as Lender may reasonably require to perfect its security interest.","Describing collateral broadly ('all assets') without perfecting the security interest through a UCC-1 filing or PPSA registration. An unperfected security interest is treated as unsecured in bankruptcy proceedings.",{"name":335,"plain_english":336,"sample_language":337,"common_mistake":338},"Governing Law, Jurisdiction, and Notices","Specifies which jurisdiction's law governs the agreement, where disputes are resolved, and the required method and address for formal notices between parties.","This Agreement is governed by the laws of [STATE / PROVINCE], without regard to conflict-of-law principles. Each party consents to the exclusive jurisdiction of the courts of [CITY, STATE / PROVINCE]. Notices shall be in writing and delivered by overnight courier or email with read-receipt to the addresses set out in Schedule B.","Choosing governing law with no connection to where the borrower operates or where the collateral is located. Courts may decline to apply a chosen law when it has no meaningful nexus to the transaction, leaving both parties uncertain about which rules apply.",[340,345,350,355,360,365,370,375],{"step":341,"title":342,"description":343,"tip":344},1,"Identify both parties using their registered legal entity names","Enter the lender's and borrower's full legal names exactly as they appear on their formation or registration documents. Include entity type and state or province of formation.","Cross-reference the borrower's corporate registry filing — a name mismatch between the agreement and a UCC or PPSA filing can invalidate the security interest.",{"step":346,"title":347,"description":348,"tip":349},2,"Set the commitment amount and availability mechanics","Enter the maximum credit limit. If the facility is receivables- or inventory-based, include a borrowing base formula in Schedule A that caps availability to a percentage of eligible collateral.","For asset-based lines, a standard advance rate is 80% of eligible receivables under 90 days and 50% of eligible inventory — adjust based on the borrower's industry and asset quality.",{"step":351,"title":352,"description":353,"tip":354},3,"Define the interest rate and benchmark","Choose a fixed rate or a floating rate indexed to SOFR, Prime, or another published benchmark. Enter the spread, day-count convention (365 or 360), and payment frequency (monthly is standard).","Include a benchmark replacement provision referencing SOFR Term Rate fallback language published by ARRC — this protects both parties if the benchmark is discontinued.",{"step":356,"title":357,"description":358,"tip":359},4,"List all fees with precise amounts and due dates","Enter the origination fee (flat dollar or basis points on the commitment), commitment fee rate on the undrawn balance, and any annual renewal fee. State each due date explicitly.","Express commitment fees as an annual percentage rate applied to the average daily undrawn balance — this makes quarterly billing calculations unambiguous.",{"step":361,"title":362,"description":363,"tip":364},5,"Set repayment terms and the clean-up period","Specify whether advances are interest-only until maturity or amortizing. Set the final maturity date and define the annual clean-up period — typically 30 consecutive days with a zero balance.","For a 12-month revolving facility, a 30-day clean-up period in Q3 (July–September) aligns with typical seasonal low-points for many working-capital borrowers.",{"step":366,"title":367,"description":368,"tip":369},6,"Draft covenants with built-in headroom","Set affirmative covenants (financial reporting timelines, insurance minimums, licensing maintenance) and negative covenants (debt incurrence caps, asset-sale restrictions). For financial ratio covenants, set the threshold at least 10–15% below the borrower's current ratio.","Include a 30-day cure period for financial covenant breaches — automatic acceleration on a first technical miss is commercially unusual and often unenforceable.",{"step":371,"title":372,"description":373,"tip":374},7,"Describe collateral and plan the perfection filings","Identify the specific asset classes pledged. Prepare the corresponding UCC-1 financing statement (US) or PPSA financing statement (Canada) to be filed simultaneously with or immediately after signing.","File the UCC-1 in the state where the borrower is legally organized (for registered entities), not where the assets are physically located — a common filing error.",{"step":376,"title":377,"description":378,"tip":379},8,"Execute before any funds are advanced","Both parties sign the agreement and all schedules before the first advance is disbursed. If the lender requires a legal opinion, obtain it prior to execution.","Use a dated execution block that records the exact signing date — courts have voided security interests when the financing statement was filed before the authenticated security agreement was executed.",[381,385,389,393,397,401],{"mistake":382,"why_it_matters":383,"fix":384},"Failing to perfect the security interest","An unperfected security interest is treated as unsecured debt in the borrower's bankruptcy. The lender joins the queue of general creditors instead of exercising first-priority rights over the collateral.","File a UCC-1 financing statement in the borrower's jurisdiction of organization (US) or a PPSA financing statement in the applicable province (Canada) on the same day the agreement is signed.",{"mistake":386,"why_it_matters":387,"fix":388},"Setting financial covenants with no headroom","A covenant set at the borrower's current ratio triggers default on the first quarter of any minor softness, forcing acceleration or waiver negotiations that damage the lending relationship.","Set the covenant floor at least 10–15% below the borrower's trailing twelve-month ratio and include a 30-day cure period for first-time breaches.",{"mistake":390,"why_it_matters":391,"fix":392},"Omitting a benchmark replacement provision","If the named benchmark is discontinued and the agreement is silent, neither party has a clear contractual mechanism to reprice the facility — creating a dispute or unintentional zero-rate period.","Include a fallback rate clause referencing ARRC-recommended SOFR Term Rate language for USD facilities, or the applicable IBOR replacement language for other currencies.",{"mistake":394,"why_it_matters":395,"fix":396},"No cure period for covenant breaches","Automatic default with no cure period for a technical covenant breach is commercially unreasonable and courts in several jurisdictions have refused to enforce accelerated remedies on that basis, leaving the lender in a worse position than if a cure period had been included.","Include a tiered cure structure: 5 business days for payment defaults and 30 days for covenant breaches, with lender notification required to start the cure clock.",{"mistake":398,"why_it_matters":399,"fix":400},"Using a trade name instead of the registered legal entity","A security filing against a trade name does not perfect the lender's interest — it must be made against the exact legal name of the registered entity, or it is seriously misleading and ineffective.","Obtain a certificate of good standing or corporate registry printout for the borrower and copy the entity name character-for-character into the agreement and all financing statements.",{"mistake":402,"why_it_matters":403,"fix":404},"Omitting the clean-up period on a working-capital facility","Without a clean-up period, a revolving line quietly converts into permanent term financing over time, changing the lender's risk profile and potentially triggering accounting reclassification of the debt.","Include a 30-consecutive-day zero-balance requirement in each calendar year and a covenant requiring the borrower to certify compliance within 10 days of the clean-up period ending.",[406,409,412,415,418,421,424,427,430],{"question":407,"answer":408},"What is a line of credit agreement?","A line of credit agreement is a legally binding contract between a lender and a borrower that establishes a revolving credit facility — setting the maximum amount the borrower can draw, the interest rate, the advance and repayment mechanics, covenants, fees, and termination conditions. Unlike a term loan, which disburses a lump sum, a line of credit allows the borrower to draw, repay, and redraw up to the commitment limit repeatedly during the facility term, making it well-suited for working-capital and seasonal financing needs.\n",{"question":410,"answer":411},"What is the difference between a line of credit agreement and a loan agreement?","A loan agreement typically documents a single lump-sum disbursement with a fixed repayment schedule — the borrower draws all funds at closing and repays on a set amortization. A line of credit agreement establishes a revolving facility where the borrower draws and repays multiple times up to a maximum commitment. Interest accrues only on the outstanding balance, making a line of credit more flexible and often less costly for businesses with fluctuating cash-flow needs.\n",{"question":413,"answer":414},"What should a line of credit agreement include?","At minimum: the parties' legal names, maximum commitment amount, interest rate and benchmark, advance request procedure, repayment terms and maturity date, clean-up period, fees (origination, commitment, renewal), affirmative and negative covenants, events of default with cure periods, collateral description, perfection requirements, and governing law. Missing any of these creates gaps that become expensive to resolve if the borrower defaults or the relationship sours.\n",{"question":416,"answer":417},"Does a line of credit agreement need to be secured?","Not always — unsecured lines of credit exist, particularly for borrowers with strong credit profiles or in inter-company arrangements. However, most commercial lines are secured by a first-priority interest in accounts receivable, inventory, or general business assets. A secured facility gives the lender priority over those assets in a bankruptcy and typically allows a higher commitment amount or lower interest rate. If secured, the security interest must be perfected through a UCC-1 or PPSA filing to be enforceable against third parties.\n",{"question":419,"answer":420},"What is a clean-up period and why is it required?","A clean-up period requires the borrower to reduce the outstanding balance to zero for a specified number of consecutive days — typically 30 — at least once per year. It confirms the facility is being used for short-term working-capital purposes rather than as permanent financing. Lenders and auditors use the clean-up period to distinguish revolving credit from term debt, which affects how the liability is classified on the borrower's balance sheet and how the lender assesses credit risk on renewal.\n",{"question":422,"answer":423},"What interest rate should a line of credit agreement use?","Most USD commercial lines are priced at a spread over SOFR (Secured Overnight Financing Rate) or Prime Rate — for example, SOFR plus 2.50% or Prime plus 1.00%. Fixed rates are used for shorter-term or private lender facilities where simplicity is preferred. Whichever benchmark is chosen, the agreement should include a benchmark replacement provision in case the rate is discontinued, specifying a fallback calculation method and the party responsible for determining the replacement rate.\n",{"question":425,"answer":426},"What covenants are typically included in a line of credit agreement?","Affirmative covenants typically require the borrower to deliver quarterly financial statements, maintain minimum insurance coverage, preserve required business licenses, and pay taxes when due. Negative covenants commonly restrict additional indebtedness above a threshold, asset sales without lender consent, dividends or owner distributions while the line is drawn, and change-of-control transactions. Financial maintenance covenants — such as a minimum debt service coverage ratio or maximum leverage ratio — are common on larger or secured facilities.\n",{"question":428,"answer":429},"Is a line of credit agreement enforceable without a lawyer?","A well-drafted template is generally enforceable when properly executed by both parties. However, enforceability of specific provisions — particularly security interests, cross-default clauses, and financial covenants — depends on jurisdiction-specific rules that a template alone may not fully address. Legal review is strongly recommended for facilities above $100,000, for borrowers with complex capital structures, or when the lender intends to rely on the security interest in an insolvency scenario.\n",{"question":431,"answer":432},"How is a line of credit agreement terminated?","Termination typically occurs in one of three ways: the facility matures on its stated maturity date and all outstanding amounts are repaid; the borrower voluntarily terminates by repaying the full balance and providing written notice; or the lender accelerates and demands full repayment following an uncured event of default. Upon termination, the lender should file a UCC-3 termination statement (US) or discharge the PPSA registration (Canada) to release the security interest from public record.\n",[434,438,442,446],{"industry":435,"icon_asset_id":436,"specifics":437},"Retail and E-commerce","industry-retail","Seasonal inventory purchases and order financing make revolving lines ideal; borrowing base tied to inventory value and accounts receivable is common.",{"industry":439,"icon_asset_id":440,"specifics":441},"Construction and Contracting","industry-construction","Progress billing cycles create cash-flow gaps; lines are often secured by contract receivables with advance rates reflecting retainage holdbacks.",{"industry":443,"icon_asset_id":444,"specifics":445},"Manufacturing and Wholesale","industry-manufacturing","Raw material procurement and bulk purchase discounts drive draw activity; borrowing base formulas typically separate finished goods from raw inventory at different advance rates.",{"industry":447,"icon_asset_id":448,"specifics":449},"Professional Services","industry-professional-services","Unsecured or accounts-receivable-secured lines bridge payroll between client billing cycles; clean-up periods align with fiscal year-end.",[451,454,457,460],{"vs":86,"vs_template_id":452,"summary":453},"loan-agreement-D184","A loan agreement disburses a single lump sum at closing with a fixed amortization schedule — the borrower pays down principal regardless of cash-flow needs. A line of credit agreement is revolving: the borrower draws only what is needed and repays when cash is available, paying interest only on the outstanding balance. Use a loan agreement for a defined capital expenditure; use a line of credit for ongoing working-capital management.",{"vs":103,"vs_template_id":455,"summary":456},"promissory-note-D192","A promissory note is a simple, unconditional promise to repay a specified sum with interest — it documents the debt obligation but does not govern the ongoing mechanics of drawing and repaying a revolving facility. A line of credit agreement is more comprehensive, covering advance procedures, covenants, events of default, and security. Use a promissory note to evidence a one-time loan; use a line of credit agreement to govern a multi-draw facility.",{"vs":240,"vs_template_id":458,"summary":459},"secured-loan-agreement-D13348","A secured loan agreement provides a lump-sum disbursement backed by specific collateral — real property, equipment, or a vehicle. A line of credit agreement is revolving and typically secured by floating assets such as receivables and inventory rather than fixed property. The key distinction is structure: term versus revolving, and fixed collateral versus an asset-based borrowing base.",{"vs":136,"vs_template_id":461,"summary":462},"convertible-note-agreement-D13327","A convertible note is a short-term debt instrument that converts into equity at a future financing round — it is primarily a startup fundraising tool, not a working-capital facility. A line of credit agreement is a lending product with no equity component. Use a convertible note to bridge a startup to its next equity round; use a line of credit agreement when the borrower needs flexible access to cash with no dilution.",{"use_template":464,"template_plus_review":468,"custom_drafted":472},{"best_for":465,"cost":466,"time":467},"Private lender-to-business lines under $100,000 with straightforward collateral and no complex covenant structures","Free","30–60 minutes",{"best_for":469,"cost":470,"time":471},"Facilities between $100,000 and $500,000, borrowers with existing debt, or any secured line requiring UCC or PPSA filings","$500–$1,500","2–5 days",{"best_for":473,"cost":474,"time":475},"Syndicated facilities, asset-based lending with a borrowing base audit, regulated lenders, or cross-border credit arrangements","$3,000–$15,000+","2–6 weeks",[477,482,487,492],{"code":478,"name":479,"flag_asset_id":480,"note":481},"us","United States","flag-us","Security interests in personal property are governed by Article 9 of the Uniform Commercial Code — the lender must file a UCC-1 financing statement in the state where the borrower is organized to perfect its interest. State usury laws cap interest rates; rates vary widely by state and entity type (many states exempt commercial loans to businesses). SOFR is the standard benchmark for new USD facilities following the 2023 cessation of USD LIBOR. Federal and state banking regulators impose additional requirements on licensed lenders.",{"code":483,"name":484,"flag_asset_id":485,"note":486},"ca","Canada","flag-ca","Personal property security is governed provincially under the PPSA (Personal Property Security Act) in all provinces except Quebec, where the Civil Code applies. Registration must be made in the province where the collateral is located or the debtor is domiciled. Interest rates above 60% per annum are criminally usurious under the Criminal Code. Quebec contracts must be in French for provincially regulated entities; bilingual documentation is best practice for any borrower operating in the province.",{"code":488,"name":489,"flag_asset_id":490,"note":491},"uk","United Kingdom","flag-uk","Credit facilities to businesses are regulated under the Financial Services and Markets Act 2000 when extended by an FCA-authorised lender. Security over company assets typically takes the form of a fixed or floating charge registered at Companies House within 21 days of creation under the Companies Act 2006 — late registration voids the charge against a liquidator. SONIA (Sterling Overnight Index Average) replaced GBP LIBOR as the standard benchmark for sterling facilities.",{"code":493,"name":494,"flag_asset_id":495,"note":496},"eu","European Union","flag-eu","Commercial credit facilities are generally subject to member-state law; there is no single EU-wide commercial lending statute. Security perfection rules, priority, and enforcement vary significantly — German law requires notarized pledges for certain asset classes; French law has distinct rules for nantissement (pledge) of receivables. GDPR applies to the processing of personal data in KYC and credit-assessment procedures. The EU Benchmarks Regulation governs the use of financial benchmarks, including EURIBOR, in credit agreements within the EEA.",[234,250,241,244,234,241,241,241,498,499,500,501],"security-agreement-D915","personal-guarantee-D405","non-disclosure-agreement-nda-D12692","term-sheet-D473",{"emit_how_to":191,"emit_defined_term":191},{"primary_folder":95,"secondary_folder":504,"document_type":505,"industry":506,"business_stage":507,"tags":508,"confidence":514},"business-financing-and-loans","agreement","general","all-stages",[509,510,511,512,513],"line-of-credit","loan-agreement","credit-facility","working-capital","lending",0.95,"\u003Ch2>What is a Line of Credit Agreement?\u003C/h2>\n\u003Cp>A \u003Cstrong>Line of Credit Agreement\u003C/strong> is a legally binding contract between a lender and a borrower that establishes a revolving credit facility — defining the maximum commitment amount, the interest rate and benchmark, the mechanics for drawing and repaying funds, financial covenants, fees, collateral, and the conditions under which the facility terminates or can be accelerated. Unlike a term loan that disburses a fixed sum at closing, a revolving line allows the borrower to draw up to the commitment limit, repay, and draw again repeatedly during the facility term, with interest accruing only on the outstanding balance. This structure makes it the standard instrument for working-capital financing, seasonal inventory purchases, and bridging cash-flow gaps between billing and collection cycles.\u003C/p>\n\u003Ch2>Why You Need This Document\u003C/h2>\n\u003Cp>Operating a credit facility without a written agreement exposes both parties to significant and asymmetric risk. Without defined advance procedures, a lender has no contractual basis to refuse an improper draw request. Without financial covenants, there is no early-warning mechanism before a borrower's deteriorating balance sheet becomes an unrecoverable default. Without a perfected security interest, an unsecured lender joins the general creditor queue in a bankruptcy proceeding — often recovering cents on the dollar while a secured lender with a properly filed UCC-1 or PPSA registration recovers first from the pledged collateral. For the borrower, a clearly documented facility with defined cure periods and a reasonable covenant structure prevents a single bad quarter from triggering immediate acceleration. This template provides the full contractual framework — commitment mechanics, rate provisions, covenants, default remedies, and perfection language — so both parties enter the facility with their rights and obligations unambiguously documented from the first advance.\u003C/p>\n",1781185972200]