Typical Documents You Will Need to Sign For Business Loans
When you get a bank to give you a loan for your business startup or expansion, you will most likely have to sign several documents. Here is a description of each of these documents:
- A loan agreement, which describes the overall terms of the loan, including representations ,covenants, and warranties (promises)of the borrower.
- A promissory note which describes the terms of the loan. Sometimes the loan agreement and promissory note are combined in one document.
- A security interest, usually including a UCC-1 document, detailing the collateral securing the loan.
- A personal guarantee from the borrower. With or without collateral, you may still need to personally guarantee your business loan, especially for a startup. This means that you must promise to repay the loan if the business cannot. A personal guarantee is still binding, even if the business is a corporation, LLC, or other business entity that is separate from the owner.
