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Internal Loan Agreement for the United Kingdom

Internal Loan Agreement Template for England and Wales

An Internal Loan Agreement governed by English and Welsh law is a legally binding document that establishes the terms and conditions for a loan between related entities within the same corporate group. It sets out the loan amount, interest rates, repayment terms, and any security arrangements, while ensuring compliance with UK company law, tax regulations, and transfer pricing requirements. The agreement provides a formal structure for intra-group lending while maintaining proper corporate governance and regulatory compliance.

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Internal Loan Agreement

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What is a Internal Loan Agreement?

The Internal Loan Agreement is commonly used when one entity within a corporate group needs to provide financing to another group entity. This document, governed by English and Welsh law, is essential for establishing clear terms for intra-group lending, ensuring compliance with transfer pricing regulations, and maintaining proper corporate governance. It includes detailed provisions for loan amount, interest calculation, repayment terms, and security arrangements, while addressing tax implications and regulatory requirements. The agreement helps organizations manage their internal funding needs while maintaining legal and regulatory compliance.

What sections should be included in a Internal Loan Agreement?

1. Parties: Identification of lender and borrower entities

2. Background: Context of the loan and relationship between parties

3. Definitions: Key terms used throughout the agreement

4. Loan Amount and Purpose: Specification of loan amount and intended use

5. Interest: Interest rate, calculation method and payment terms

6. Repayment Terms: Schedule and method of repayment

7. Events of Default: Circumstances constituting default and consequences

8. Governing Law: Specification of applicable law and jurisdiction

What sections are optional to include in a Internal Loan Agreement?

1. Security: Details of any security provided for the loan - include when loan is secured

2. Guarantees: Terms of any guarantees provided - include when third-party guarantees are involved

3. Tax Gross-Up: Provisions for tax-related adjustments - include when tax implications need specific attention

4. Assignment and Transfer: Rights to transfer or assign the loan - include when transfer rights are relevant

What schedules should be included in a Internal Loan Agreement?

1. Repayment Schedule: Detailed schedule of repayment dates and amounts

2. Form of Drawdown Notice: Template for requesting loan disbursements

3. Security Documents: Details of any security arrangements if applicable

4. Corporate Authorizations: Copies of relevant board resolutions and approvals

Authors

Alex Denne

Head of Growth (Open Source Law) @ tiktok成人版 | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

England and Wales

Document Type

Loan Agreement

Sector

Banking

Cost

Free to use
Relevant legal definitions
































Clauses





























Industries

Companies Act 2006: Primary legislation governing corporate entities, particularly sections relating to directors' duties, intra-group transactions, and requirements for board approvals and corporate authority

Consumer Credit Act 1974: Regulations concerning consumer credit arrangements, potentially relevant even for internal loans if there's possibility of consumer involvement or if the loan could be restructured or assigned

Financial Services and Markets Act 2000: Establishes the regulatory framework for financial activities, particularly relevant if either party is a regulated entity

Corporation Tax Act 2009: Tax legislation covering transfer pricing considerations, tax treatment of interest payments, and thin capitalization rules

Income Tax Act 2007: Tax legislation governing withholding tax requirements on interest payments

Insolvency Act 1986: Legislation covering priority of claims in insolvency and corporate group considerations

Financial Collateral Arrangements (No 2) Regulations 2003: Regulations relevant when security is being provided as part of the loan arrangement

Modern Slavery Act 2015: Compliance requirements that may need to be considered if part of group policy

FCA/PRA Regulations: Regulatory requirements applicable if either party is regulated by the Financial Conduct Authority or Prudential Regulation Authority

Basel III Requirements: International banking regulations that must be considered if banking entities are involved in the loan agreement

Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks, 聽Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination, 聽Severance Pay, Governing Law, Entire Agreemen

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