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Interim Loan Agreement Template for Hong Kong

A comprehensive legal document governed by Hong Kong law that establishes the terms and conditions for a temporary financing arrangement between a lender and borrower. This agreement sets out the key provisions for the interim loan facility, including the loan amount, interest rate, repayment terms, conditions precedent, and events of default. It incorporates specific requirements under Hong Kong's financial regulations and banking laws, particularly the Money Lenders Ordinance and Banking Ordinance, while ensuring compliance with local security and registration requirements. The document serves as a bridge financing solution until more permanent financing arrangements can be put in place.

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What is a Interim Loan Agreement?

The Interim Loan Agreement is a critical financing document used in situations where temporary or bridge financing is required pending the arrangement of more permanent funding solutions. This document type is particularly relevant in Hong Kong's dynamic financial market, where rapid access to financing is often necessary for time-sensitive transactions. The agreement includes essential provisions required under Hong Kong law, including compliance with the Money Lenders Ordinance and Banking Ordinance. It typically covers a lending period of 3-12 months and includes detailed terms on facility amount, interest calculations, drawdown mechanics, and repayment obligations. The document is structured to protect both lender and borrower interests while maintaining flexibility for transition to permanent financing arrangements.

What sections should be included in a Interim Loan Agreement?

1. Parties: Identification of the lender(s) and borrower(s) with their respective details

2. Background: Context of the interim loan, including purpose and temporary nature of the facility

3. Definitions and Interpretation: Key terms used in the agreement and rules for interpretation

4. The Facility: Details of the loan amount, purpose, and availability period

5. Conditions Precedent: Conditions that must be satisfied before drawdown

6. Drawdown: Process and requirements for drawing down the loan

7. Interest: Interest rate, calculation method, and payment dates

8. Repayment: Terms of repayment including final repayment date

9. Representations and Warranties: Standard representations and warranties from the borrower

10. Undertakings: General and financial covenants of the borrower

11. Events of Default: Circumstances constituting default and consequences

12. Changes to Parties: Rules regarding assignment and transfer

13. Payments: Payment mechanics, currency, and timing

14. Notices: How formal communications between parties should be made

15. General Provisions: Miscellaneous legal provisions including governing law and jurisdiction

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

1. Security: Include if any security is being provided for the interim loan

2. Guarantee: Include if there are any guarantors for the loan

3. Agent and Security Trustee Provisions: Include for syndicated facilities with multiple lenders

4. Increased Costs and Tax Gross-up: Include for longer interim periods or where tax implications are significant

5. Market Disruption: Include if using floating interest rates

6. Bridge to Permanent Financing: Include if the interim loan is explicitly bridging to a specific permanent financing

7. Majority Lender Decisions: Include for syndicated facilities requiring lender voting mechanisms

What schedules should be included in a Interim Loan Agreement?

1. Form of Drawdown Request: Standard form for requesting loan disbursement

2. Conditions Precedent Documents: List of required documents and conditions to be satisfied

3. Repayment Schedule: If applicable, schedule of repayment dates and amounts

4. Form of Transfer Certificate: Standard form for transferring loan participations

5. Lender Commitments: For syndicated facilities, list of lenders and their commitments

6. Security Details: If applicable, details of security assets and registration requirements

7. Contact Details: Contact information for all parties for notices and communications

Authors

Alex Denne

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

Jurisdiction

Hong Kong

Publisher

Genie AI

Cost

Free to use

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