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Commercial Loan Agreement Template for Saudi Arabia

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Key Requirements PROMPT example:

Commercial Loan Agreement

"I need a Commercial Loan Agreement for a SAR 50 million facility to a manufacturing company, with machinery and equipment as security, including quarterly financial covenants and requiring direct SAMA approval due to the size of the facility."

Document background
This Commercial Loan Agreement template is designed for use in Saudi Arabia when a financial institution provides commercial financing to a corporate entity. The document incorporates essential Shariah-compliant financing principles and meets Saudi Central Bank (SAMA) requirements. It is particularly relevant for medium to large-scale commercial financing transactions where formal documentation of lending terms, security arrangements, and obligations is required. The agreement includes provisions for profit calculation (rather than interest), drawdown mechanisms, security arrangements, and covenant packages, all structured to comply with both Islamic and Saudi commercial law. This template should be customized based on the specific financing structure, security package, and commercial terms agreed between the parties.
Suggested Sections

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

2. Background: Context of the loan agreement and confirmation of Shariah compliance

3. Definitions: Definitions of terms used throughout the agreement

4. Facility Details: Amount, purpose, and nature of the financing facility

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

6. Drawdown Mechanics: Procedures and requirements for utilizing the loan facility

7. Repayment Terms: Schedule and mechanics of repayment, including profit rate calculation

8. Security: Details of collateral and security arrangements

9. Representations and Warranties: Statements of fact and assurances from the Borrower

10. Covenants: Positive and negative obligations of the Borrower during the loan term

11. Events of Default: Circumstances constituting default and consequences

12. Taxes and Costs: Allocation of taxes, fees, and other costs

13. Notices: Communication procedures between parties

14. Governing Law and Jurisdiction: Confirmation of Saudi law application and dispute resolution

15. General Provisions: Miscellaneous legal provisions including assignment and amendments

Optional Sections

1. Islamic Structure Provisions: Detailed provisions for specific Islamic financing structure (e.g., Murabaha) - required if using a specific Islamic financing structure

2. Guarantees: Terms of any third-party guarantees - include if guarantors are involved

3. Syndication Provisions: Provisions for multiple lenders - required for syndicated facilities

4. Agency Provisions: Terms relating to facility agent's role - needed for syndicated or complex facilities

5. Account Bank Provisions: Special provisions for designated accounts - needed if specific account arrangements required

6. Insurance: Requirements for insurance of collateral - include if physical assets are secured

7. Step-In Rights: Lender's rights to take control in specific circumstances - for project finance facilities

Suggested Schedules

1. Facility Summary: Detailed terms of the facility including amounts, profit rates, and fees

2. Form of Drawdown Notice: Template for requesting loan disbursements

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

4. Security Documents: List and copies of all security documents

5. Conditions Precedent Documents: List of required documents and conditions

6. Form of Compliance Certificate: Template for periodic compliance reporting

7. Shariah Structure Documentation: Details of Islamic financing structure and compliance

8. Form of Transfer Certificate: Template for transferring loan participations

9. Financial Covenants Calculations: Formulas and methods for calculating financial covenants

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

Relevant legal definitions











































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Relevant Industries

Banking & Financial Services

Real Estate & Construction

Manufacturing & Industrial

Retail & Commercial

Healthcare

Technology & Telecommunications

Energy & Utilities

Transportation & Logistics

Agriculture & Food Production

Mining & Natural Resources

Education

Hospitality & Tourism

Relevant Teams

Legal

Finance

Treasury

Compliance

Risk Management

Corporate Banking

Credit

Islamic Banking

Commercial Banking

Business Development

Company Secretariat

Relevant Roles

Chief Financial Officer

Finance Director

Treasury Manager

Corporate Lawyer

Legal Counsel

Compliance Officer

Risk Manager

Credit Officer

Corporate Banking Manager

Relationship Manager

Shariah Compliance Officer

Finance Manager

Commercial Director

Business Development Manager

Financial Controller

Corporate Secretary

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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