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The Interest Only Loan Agreement under Swiss law is a fundamental document used when parties wish to establish a lending arrangement where only interest payments are required during the loan term. This structure is particularly useful for borrowers seeking lower periodic payments or in situations where cash flows are irregular or expected to increase over time. The agreement must comply with Swiss federal legislation, including the Swiss Code of Obligations (OR/CO) and, where applicable, the Swiss Banking Act and consumer protection laws. It contains detailed provisions on interest calculations, payment mechanisms, default scenarios, and enforcement procedures. The document is commonly used in real estate financing, business expansion, and investment scenarios where principal preservation during the loan term is desired. The agreement includes specific Swiss law requirements regarding form, content, and execution, making it distinct from similar agreements in other jurisdictions.

1. Parties: Identification of the lender and borrower with full legal names and addresses

2. Background: Context of the loan arrangement and purpose

3. Definitions: Defined terms used throughout the agreement, including financial definitions specific to interest-only structures

4. Loan Amount and Purpose: Specification of the principal amount and permitted use of funds

5. Interest Provisions: Detailed terms of interest calculation, rate (fixed or variable), payment dates, and computation methods

6. Payment Terms: Schedule and mechanics of interest payments, including payment methods and account details

7. Term and Repayment: Duration of the loan and conditions for final repayment of principal

8. Conditions Precedent: Prerequisites for loan disbursement

9. Representations and Warranties: Standard declarations by the borrower about their legal and financial status

10. Covenants: Ongoing obligations of the borrower during the loan term

11. Events of Default: Circumstances constituting default and consequences

12. Taxes and Costs: Allocation of taxes, stamp duties, and other costs

13. Notices: Communication procedures between parties

14. Governing Law and Jurisdiction: Confirmation of Swiss law governance and jurisdiction for disputes