What is a business loan agreement and why would you get one?

It is a supplement to the note. The note is usually brief and says that the business will pay. The agreement could require monthly or quarterly financial statements or could require certain financial ratios.

Al

When is the loan agreement provided to the borrower?

Usually the terms are negotiated (because the borrower will have to meet the performance ratios, capital levels, liquidity levels, etc.) and documented in the agreement. Generally commercial borrowers get to review docs prior to closing because of the performance levels that can be included. Some (even small businesses) may want their attorney to review the docs. In some cases, everything is negotiated and the final docs are presented at closing. Depends upon what the borrower insists on.

Thanks KB!