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The Simple Loan Agreement is essential for documenting financial transactions in Saudi Arabia where conventional lending practices must align with Islamic finance principles. This document is typically used when a lender (usually a financial institution) provides financing to either individual or corporate borrowers for personal or business purposes. The agreement must comply with both Saudi Arabian civil law and Sharia requirements, particularly avoiding traditional interest (riba) structures. It includes comprehensive details about the loan amount, purpose, profit-sharing arrangements, repayment schedule, and security provisions. The Simple Loan Agreement is particularly important in Saudi Arabia as it must balance modern financing needs with religious and legal requirements, incorporating appropriate Islamic finance structures while maintaining enforceability under Saudi law.

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

2. Background: Context of the loan agreement and the parties' intention to enter into a Sharia-compliant financing arrangement

3. Definitions: Key terms used throughout the agreement, including Islamic finance terminology

4. Principal Amount and Purpose: The amount of the loan and its intended use, confirming it is for Sharia-compliant purposes

5. Disbursement: Terms and conditions for the release of the loan amount

6. Repayment Terms: Schedule and method of repayment, structured in compliance with Sharia principles

7. Profit Rate: The agreed profit rate or administrative fees (avoiding conventional interest terminology)

8. Security: Details of any security or collateral provided for the loan

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

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

11. Events of Default: Circumstances that would constitute a breach of the agreement

12. Remedies: Actions available to the lender in case of default

13. Governing Law and Jurisdiction: Confirmation of Saudi law application and Sharia compliance

14. Notices: Communication procedures between parties

15. Execution: Signature blocks and execution requirements