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Unsecured Loan Note for Nigeria

Unsecured Loan Note Template for Nigeria

A legally binding financial instrument governed by Nigerian law that documents an unsecured lending arrangement between a lender and borrower. This document sets out the terms and conditions of the loan, including the principal amount, interest rate, repayment schedule, and default provisions, without requiring any collateral or security interest in the borrower's assets. It incorporates relevant requirements under Nigerian financial regulations, including Central Bank of Nigeria guidelines and the Money Lenders Act, while establishing clear rights and obligations of all parties involved.

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Unsecured Loan Note

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What is a Unsecured Loan Note?

The Unsecured Loan Note is a fundamental financing document used in Nigerian business transactions where formal documentation of lending arrangements is required without the need for security or collateral. This document is particularly relevant in situations where the borrower's creditworthiness or relationship with the lender eliminates the need for secured lending. The note complies with Nigerian financial regulations and banking laws, incorporating necessary provisions for enforcement under Nigerian jurisdiction. It typically includes comprehensive terms covering loan amount, interest calculations, repayment schedules, events of default, and remedies available to the lender. This document structure is commonly used for corporate lending, business expansion, working capital financing, and other commercial purposes where unsecured debt is appropriate.

What sections should be included in a Unsecured Loan Note?

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

2. Background: Brief context of the loan arrangement and purpose

3. Definitions and Interpretation: Definitions of key terms used in the note and rules of interpretation

4. The Loan: Principal amount, purpose, and drawdown conditions

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

6. Repayment: Repayment schedule, prepayment provisions, and payment mechanics

7. Representations and Warranties: Borrower's confirmations regarding their legal status, capacity, and financial condition

8. Borrower Covenants: Ongoing obligations of the borrower during the loan term

9. Events of Default: Circumstances constituting default and consequences

10. Expenses and Indemnity: Allocation of costs and indemnification obligations

11. Notices: Communication methods and contact details

12. Assignment and Transfer: Rights to transfer or assign the loan note

13. Governing Law and Jurisdiction: Nigerian law as governing law and jurisdiction for disputes

What sections are optional to include in a Unsecured Loan Note?

1. Security: Include if any collateral is later added despite being initially unsecured

2. Multiple Lenders: Required if there is more than one lender, addressing voting rights and decision-making

3. Use of Proceeds: Include if there are specific requirements for how the loan must be used

4. Tax Gross-up: Include if tax implications need to be addressed specifically

5. Change of Control: Include if changes in borrower ownership should trigger repayment

6. Financial Covenants: Include if specific financial metrics must be maintained

7. Information Covenants: Include if regular financial reporting is required

What schedules should be included in a Unsecured Loan Note?

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

2. Interest Calculation: Detailed methodology for calculating interest

3. Form of Draw Down Notice: Standard form for requesting loan disbursement

4. Form of Compliance Certificate: Template for periodic compliance confirmation

5. Contact Details: Comprehensive contact information for all parties

6. Form of Transfer Certificate: Template for transferring the loan note to another party

Authors

Alex Denne

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

Jurisdiction

Nigeria

Publisher

Ƶ

Document Type

Promissory Note

Sector

Banking

Cost

Free to use
Relevant legal definitions














































Clauses






























Relevant Industries

Banking & Financial Services

Real Estate

Manufacturing

Retail

Technology

Healthcare

Agriculture

Energy

Infrastructure

Telecommunications

Education

Small and Medium Enterprises

Relevant Teams

Legal

Finance

Treasury

Credit Risk

Compliance

Corporate Banking

Commercial Banking

Investment

Business Development

Operations

Relevant Roles

Chief Financial Officer

Finance Director

Treasury Manager

Credit Risk Manager

Legal Counsel

Corporate Lawyer

Loan Officer

Financial Controller

Compliance Officer

Commercial Director

Business Development Manager

Investment Manager

Account Manager

Corporate Banking Manager

Industries








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,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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