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The Asset Based Loan Agreement is utilized when a borrower seeks financing secured against specific assets such as inventory, equipment, accounts receivable, or other valuable collateral. This document is particularly relevant in the South African market where secured lending forms a crucial part of business financing. The agreement must comply with South African legislation, particularly the National Credit Act, Financial Intelligence Centre Act, and Consumer Protection Act. It typically includes detailed provisions for asset valuation, loan-to-value ratios, security arrangements, monitoring requirements, and enforcement mechanisms. The document is structured to protect both lender and borrower interests while ensuring regulatory compliance and practical functionality in the South African business environment.

1. Parties: Identification of the Lender and Borrower with full legal names and registration details

2. Background: Context of the loan agreement, purpose of the facility, and brief description of the asset-based security arrangement

3. Definitions: Comprehensive definitions of terms used throughout the agreement, including financial terms, security-related concepts, and compliance requirements

4. Facility and Purpose: Details of the loan amount, purpose, and relationship to the asset value

5. Security Arrangements: Description of assets provided as security, perfection requirements, and registration of security interests

6. Conditions Precedent: Prerequisites that must be satisfied before the facility becomes available

7. Drawdown Mechanics: Procedures and requirements for accessing the loan facility

8. Interest and Fees: Interest rate calculations, payment periods, and applicable fees

9. Repayment Terms: Repayment schedule, prepayment provisions, and payment mechanics

10. Representations and Warranties: Statements of fact and assurances given by the Borrower

11. Covenants: Ongoing obligations of the Borrower, including financial covenants and asset maintenance requirements

12. Events of Default: Circumstances constituting default and consequent remedies available to the Lender

13. Enforcement Rights: Lender's rights regarding the secured assets upon default

14. Boilerplate Clauses: Standard legal provisions including notices, amendments, governing law, and jurisdiction