Free Business Loan Agreement Template

BUSINESS LOAN AGREEMENT

Commercial Facility  ·  England And Wales  ·  2026-05-01

This Business Loan Agreement (the "Agreement") is made on 2026-05-01 between Meridian Capital Partners Ltd of 45 Lombard Street, London, EC3V 9BQ (the "Lender") and Greenfield Engineering Ltd of Unit 7, Broadmead Industrial Estate, Bristol, BS2 0EG (the "Borrower"). The parties agree as follows:

In this Agreement, unless the context otherwise requires:

"Business Day" means a day (other than Saturday, Sunday or a public holiday) on which banks are open for general business in London.
"Drawdown Date" means 2026-05-01.
"Event of Default" has the meaning given in clause 6.
"Final Repayment Date" means the date falling 36 months after the Drawdown Date.
"Insolvency Event" means any event listed in Schedule 1 to the Insolvency Act 1986 or any equivalent proceeding.
"Principal" means £150,000.00.
"Repayment Period" means the period from the Drawdown Date to the Final Repayment Date.
"SONIA" means the Sterling Overnight Index Average benchmark published by the Bank of England, the successor to GBP LIBOR (cessation: 31 December 2021; synthetic GBP LIBOR cessation: 30 September 2024).

References to statutes include any statutory modification or re-enactment (including those made by the Economic Crime and Corporate Transparency Act 2023). Headings are for convenience only and do not affect interpretation.

Subject to the terms of this Agreement, the Lender agrees to make available to the Borrower a term loan facility in the principal sum of £150,000.00 (the "Principal").

Purpose: The Principal shall be applied solely towards working capital and purchase of CNC milling equipment. The Borrower warrants that the loan is being taken wholly or predominantly for the purposes of a business carried on, or intended to be carried on, by it and accordingly that this Agreement is an exempt agreement under article 60C of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 and not a regulated credit agreement under the Consumer Credit Act 1974.

Drawdown: The Principal shall be advanced in a single tranche by bank transfer in immediately available cleared funds to the bank account notified by the Borrower to the Lender in writing, on or before 2026-05-01, subject to satisfaction (or waiver by the Lender) of the Conditions Precedent set out in clause 8 (where applicable).

Interest shall accrue on the outstanding Principal day-to-day at a fixed rate of 8.5% per annum, calculated on the basis of a 365-day year and charged on the actual number of days elapsed. Interest shall be payable by the Borrower to the Lender in arrears on each Repayment Date and on the Final Repayment Date.

Nothing in this Agreement excludes or limits the Lender's entitlement to statutory interest and compensation under the Late Payment of Commercial Debts (Interest) Act 1998 where any payment is overdue.

The Borrower shall repay the Principal together with all accrued interest and any other amounts outstanding under this Agreement by way of equal monthly instalments of principal and interest over the Repayment Period.

The first Repayment Date shall be 2026-06-01 and subsequent Repayment Dates shall fall on the corresponding day of each successive month thereafter.

All payments by the Borrower shall be made in pounds sterling by bank transfer to the account nominated by the Lender in writing, without any set-off, counterclaim, or deduction (save as required by law). If a payment falls due on a day that is not a Business Day, it shall be made on the next Business Day.

The limitation period for any action on the Principal is six (6) years from the date on which the cause of action accrued (Limitation Act 1980, s.5) or, if this Agreement is executed as a deed, twelve (12) years (s.8).

The Borrower represents and warrants to the Lender on the date of this Agreement, and shall be deemed to repeat on each Repayment Date, that:

(a) it is duly incorporated or formed and validly existing under the laws of its jurisdiction of incorporation and has full power and authority to enter into and perform this Agreement;
(b) entry into and performance of this Agreement has been duly authorised by all necessary corporate, partnership or other action;
(c) this Agreement constitutes its legal, valid and binding obligations, enforceable in accordance with its terms;
(d) no Event of Default is continuing or will arise as a result of the drawdown;
(e) the loan is wholly or predominantly for business purposes and is an exempt agreement (article 60C FSMA RAO);
(f) no litigation, arbitration or administrative proceedings are current or, to its knowledge, threatened which might reasonably be expected to have a material adverse effect;
(g) no misrepresentation has been made within the meaning of the Misrepresentation Act 1967;
(h) it has complied with its obligations to register its persons with significant control (PSC) under Part 21A of the Companies Act 2006 and (where applicable) the identity-verification requirements introduced by sections 1110A-1110N of the Companies Act 2006 (as inserted by the Economic Crime and Corporate Transparency Act 2023, in force for new directors and PSCs from 18 November 2025).

Breach of any warranty shall constitute an Event of Default under clause 6.

As continuing security for the due and punctual performance of all of the Borrower's obligations under this Agreement, the Borrower hereby grants to the Lender a first floating charge (a "Charge") over All present and future assets, undertaking and property of the Borrower, including stock-in-trade, book debts, plant and machinery.

Registration (Companies Act 2006, s.859A): The Borrower undertakes to execute all such documents and take all such steps as the Lender may require to register the security at Companies House within 21 days of creation (as required by s.859A Companies Act 2006) and, where applicable, at HM Land Registry.

Insolvency Act look-back: The parties confirm that this Agreement and any security granted under it are entered into in good faith, at arm's length and for proper business purposes, and are not intended as a transaction at an undervalue, preference or extortionate credit transaction within the meaning of sections 238-241 and 244 of the Insolvency Act 1986.

James Greenfield of 12 Clifton Road, Bristol, BS8 1AA (the "Guarantor") unconditionally and irrevocably:

(a) guarantees to the Lender the due and punctual payment by the Borrower of all sums payable under this Agreement up to a maximum aggregate amount of £150,000.00;
(b) undertakes, as a separate and independent primary obligation, to pay to the Lender on demand any sum which the Borrower fails to pay on its due date;
(c) agrees that the guarantee is a continuing guarantee and shall not be discharged by any variation, extension of time, composition, compromise, release, invalidity or unenforceability of any obligation of the Borrower.

Independent Legal Advice: The Guarantor acknowledges having received (or having had the opportunity to receive) independent legal advice on the nature and effect of this guarantee before execution. The parties have regard to the principles in Royal Bank of Scotland v Etridge (No 2) [2002] 2 AC 773 concerning undue influence in guarantees given by individuals.

Each of the following constitutes an "Event of Default":

(a) Non-payment: failure by the Borrower to pay any sum due under this Agreement on the due date and such failure continues for 5 Business Days after written notice

(b) Breach of obligation: material breach by the Borrower of any covenant, representation or undertaking under this Agreement (not being a failure to pay), which is not remediable or which, if remediable, is not remedied within 14 days of written notice

(c) Insolvency: the Borrower suffers an Insolvency Event, including but not limited to the appointment of an administrator, liquidator, receiver or administrative receiver, the passing of a winding-up resolution, the making of a bankruptcy order, or the entry into a company voluntary arrangement or scheme of arrangement under Part 26/26A of the Companies Act 2006

(d) Cross-default: any other financial indebtedness of the Borrower in excess of £10,000 becomes due and payable prematurely, or is not paid when due

(f) Change of control: any change in the ownership or control of the Borrower (as defined in s.1124 Corporation Tax Act 2010) without the Lender's prior written consent

Acceleration at Lender's option: On the occurrence and during the continuance of an Event of Default, the Lender may by written notice to the Borrower: (i) cancel the facility; (ii) declare all sums outstanding under this Agreement to be immediately due and payable; and/or (iii) enforce any security granted under clause 6. Default interest shall accrue on any overdue sum at a rate of 4% per annum above the contractual interest rate (or above the Bank of England Base Rate where the loan is interest-free), from the due date until actual payment, both before and after judgment, compounding monthly.

The Borrower may, on not less than five (5) Business Days' prior written notice to the Lender, prepay the whole or any part (being a minimum of £1,000) of the outstanding Principal without penalty. Any prepayment shall be applied first to accrued default interest, then to accrued contractual interest and finally to the Principal.

The Lender's obligation to advance the Principal is subject to satisfaction (or waiver by the Lender in its sole discretion) of the following Conditions Precedent on or before the Drawdown Date:

Certified copy of board resolution authorising borrowing and execution; certified copies of the Borrower's articles of association and certificate of incorporation; specimen signatures of authorised signatories; evidence of satisfactory AML/KYC checks and (where applicable) Companies House PSC identity verification

In addition, the Lender shall have received evidence satisfactory to it of the Borrower's anti-money laundering and "know your customer" (AML/KYC) checks under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (SI 2017/692, as amended), and (where applicable) confirmation of completed PSC identity-verification under sections 1110A-1110N of the Companies Act 2006 (as inserted by the Economic Crime and Corporate Transparency Act 2023).

For so long as any amount remains outstanding, the Borrower shall supply to the Lender:

(a) within 180 days of the end of each financial year, a copy of its audited (or unaudited, where exemption from audit applies under s.477 Companies Act 2006) annual financial statements;
(b) within 60 days of the end of each financial half-year, management accounts;
(c) promptly, such other financial or other information as the Lender may reasonably request;
(d) immediate written notice of any Event of Default or any event which, with the giving of notice or lapse of time, would constitute an Event of Default;
(e) immediate written notice of any material litigation, arbitration or administrative proceedings which are current, threatened or pending;
(f) confirmation, at least annually, of the completed PSC identity-verification of all directors and persons with significant control under sections 1110A-1110N of the Companies Act 2006 (as inserted by the Economic Crime and Corporate Transparency Act 2023).

The Borrower undertakes that, for so long as any amount remains outstanding, it shall:

(a) maintain a positive consolidated net worth at all times;
(b) ensure that its ratio of total financial indebtedness to EBITDA does not exceed such ratio as may be agreed in writing with the Lender;
(c) maintain an interest cover ratio of not less than 1.5:1, tested at each financial year end;
(d) not, without the Lender's prior written consent, (i) incur any further financial indebtedness ranking pari passu with or in priority to the loan, (ii) grant any security over its assets, (iii) dispose of any material assets outside the ordinary course of business, or (iv) declare or pay any dividend while any sum is in arrears.

The Borrower acknowledges and undertakes, for the duration of this Agreement, to operate in accordance with applicable environmental, social and governance ("ESG") standards, and in particular shall:

(a) comply with the Climate Change Act 2008 (as amended by the Climate Change Act 2008 (2050 Target Amendment) Order 2019 — net zero by 2050) and the Environment Act 2021, including any energy and emissions reporting required under the Streamlined Energy and Carbon Reporting (SECR) regime;
(b) comply with the Modern Slavery Act 2015, including (where applicable under s.54) publication of an annual slavery and human-trafficking statement;
(c) provide the Lender, on reasonable written request, with summary information on the Borrower's ESG performance, including any TCFD-aligned (Task Force on Climate-related Financial Disclosures) disclosures or carbon-intensity metrics;
(d) notify the Lender promptly of any material environmental, social or governance incident reasonably likely to have a material adverse effect on the Borrower or its business; and
(e) where this Agreement is structured as a sustainability-linked loan, comply with the ESG key performance indicators (KPIs) and sustainability performance targets (SPTs) set out in a separate schedule, failure to meet which may result in the margin step-up agreed in that schedule.

Each party warrants that it has in place, and will maintain throughout the term of this Agreement, policies and procedures designed to ensure compliance with:

(a) the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (SI 2017/692, as amended through 2025), including customer due diligence, simplified or enhanced due diligence as appropriate, ongoing monitoring and suspicious activity reporting;
(b) the Proceeds of Crime Act 2002, including the principal money-laundering offences in sections 327-329 and the failure-to-disclose offences in sections 330-332;
(c) the Bribery Act 2010, including the s.7 corporate offence of failing to prevent bribery (operating adequate procedures);
(d) the Economic Crime and Corporate Transparency Act 2023, in particular the s.199 corporate offence of failure to prevent fraud (in force from 1 September 2025) where the Borrower or Lender is a "large organisation" (meeting two of: ≥250 employees, ≥£36m turnover, ≥£18m balance sheet), and shall operate the "reasonable procedures" defence in s.200 ECCTA 2023.

The Borrower shall promptly provide such "know your customer" information and documentation as the Lender may require. Breach of this clause constitutes a material Event of Default.

Each party warrants and undertakes that:

(a) it is not, and to its knowledge none of its directors, officers, beneficial owners or affiliates is, a person designated under the Sanctions and Anti-Money Laundering Act 2018 ("SAMLA 2018") or any subordinate legislation (including the Russia (Sanctions) (EU Exit) Regulations 2019, SI 2019/855, as amended), and is not subject to UK financial sanctions administered by the Office of Financial Sanctions Implementation (OFSI);
(b) it will not, directly or indirectly, use the loan proceeds (or, in the case of the Lender, accept repayment) in any manner that would breach UK sanctions or expose the other party to sanctions risk;
(c) it shall notify the other party promptly upon becoming aware of any actual or potential sanctions issue affecting the loan, the parties or the underlying business;
(d) it shall comply with all applicable sanctions reporting obligations to OFSI, and shall not engage in any transaction with a designated person without the necessary OFSI licence.

Breach of this clause constitutes a material Event of Default and, in addition, entitles the Lender to suspend performance under this Agreement to the extent required to avoid breach of UK sanctions law.

Each party shall comply with its obligations under the UK General Data Protection Regulation and the Data Protection Act 2018 (as amended by the Data (Use and Access) Act 2025) in relation to any personal data processed in connection with this Agreement. Where the Borrower is a natural person (e.g. a sole trader or guarantor), the Lender acts as a data controller for the purposes of administering the loan, credit decisioning, fraud prevention and regulatory reporting under Article 6(1)(b), (c) and (f) UK GDPR, and the Borrower / Guarantor acknowledges receipt of the Lender's privacy notice. Personal data breaches shall be reported in accordance with Article 33 UK GDPR (72-hour ICO notification where feasible).

Set-off: The Lender may at any time set off any matured obligation owed by the Borrower to it against any obligation (whether or not matured) owed by the Lender to the Borrower. The Borrower shall make all payments without set-off or counterclaim.

Assignment: The Lender may assign or transfer any of its rights under this Agreement to any person. The Borrower may not assign or transfer any of its rights or obligations without the Lender's prior written consent.

Jurisdiction: Each party irrevocably agrees that the courts of England and Wales shall have exclusive jurisdiction to settle any dispute or claim (including non-contractual disputes or claims) arising out of or in connection with this Agreement.

Governing law: This Agreement and any dispute or claim (including non-contractual disputes or claims) arising out of or in connection with it or its subject matter or formation shall be governed by and construed in accordance with the law of England and Wales.

Entire agreement: This Agreement constitutes the entire agreement between the parties in relation to its subject matter and supersedes all prior agreements and understandings.

Variation: No variation shall be effective unless in writing and signed by or on behalf of both parties.

Severability: If any provision is held to be invalid, illegal or unenforceable, the remainder shall continue in full force.

Third-party rights: Save for any Guarantor expressly granted rights under clause 6A, a person who is not a party to this Agreement has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce any term.

Notices: Any notice shall be in writing and sent to the address set out above (or such other address as notified) by hand, first-class post or email.

Counterparts: This Agreement may be executed in counterparts, each of which when executed shall be an original, but all of which together constitute one agreement. Electronic signatures applied through a reputable e-signature platform are recognised as valid in accordance with the Electronic Communications Act 2000.

Regulatory note: The parties confirm that this loan is an exempt agreement under FSMA RAO art.60C and is not a regulated credit agreement under the Consumer Credit Act 1974 because it is made wholly or predominantly for the purposes of a business carried on by the Borrower and/or the Principal exceeds £25,000.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date indicated.