Startup Debt Financing Agreement

This Startup Debt Financing Agreement (the "Agreement") is made and entered into as of [Insert Date], by and between [Lender Name], a [Insert Lender's Legal Structure] with its principal office located at [Lender Address] (hereinafter referred to as the "Lender"), and [Your Company Name], a [Your Company Legal Structure] duly organized and existing under the laws of [Your Company Jurisdiction], with its principal place of business located at [Your Company Address] (hereinafter referred to as the "Company").

WHEREAS, the Company is engaged in the business of [Brief Description of Business Activity], and seeks to obtain financing to support its operational and capital expenditure needs;

WHEREAS, the Lender has evaluated the Company's financing request and has agreed to provide a loan to the Company under the terms and conditions set forth in this Agreement;

WHEREAS, both parties desire to set forth in writing the terms and conditions under which such loan will be made and repaid;

NOW, THEREFORE, in consideration of the mutual covenants, promises, and agreements herein contained, the parties hereto agree as follows:

Section 1: Loan Amount and Disbursement

1.1 Loan Amount: The Lender agrees to extend to the Company a loan in the total amount of $[Specify Loan Amount] (the "Loan"), subject to the terms and conditions set forth in this Agreement.

1.2 Disbursement: The Loan will be disbursed to the Company in a single lump sum within [Number of Days] days following the execution of this Agreement and the satisfaction of all conditions precedent as outlined herein. The disbursement shall be made to an account designated by the Company.

1.3 Use of Proceeds: The Company agrees to use the proceeds of the Loan exclusively for working capital, equipment purchase, expansion efforts, and not for any unlawful purpose. The Company shall provide the Lender with a detailed report outlining the use of the Loan proceeds upon request.

Section 2: Interest Rate and Repayment Terms

2.1 Interest Rate: The Loan shall bear interest at an annual rate of [Specify Interest Rate]% fixed for the term of the Loan. Interest will be calculated on a 365-day year basis and accrue daily on the outstanding principal balance of the Loan.

2.2 Repayment Schedule: The Company agrees to repay the Loan in [Specify Number] equal monthly installments of principal and interest, commencing [Specify Number of Days/Months] after the Loan disbursement date, with the final payment to be made on [Specify Maturity Date], at which time the remaining balance of the Loan and accrued interest shall be fully paid.

2.3 Prepayment: The Company may prepay the Loan in whole or in part at any time without penalty. Any prepayment shall first be applied to accrued interest and then to the principal amount.

Section 3: Warranties and Representations

3.1 Company Warranties: The Company hereby represents and warrants to the Lender that:

• It is a corporation duly organized, validly existing, and in good standing under the laws of [Specify Jurisdiction].

• It has all necessary corporate power and authority to enter into this Agreement, to incur the indebtedness represented by the Loan, and to perform its obligations under this Agreement.

• The execution, delivery, and performance of this Agreement have been duly authorized by all necessary corporate actions on the part of the Company.

• This Agreement constitutes a legal, valid, and binding obligation of the Company, enforceable against the Company in accordance with its terms.

3.2 Lender Warranties: The Lender hereby represents and warrants to the Company that:

• It has the power and authority to make the Loan to the Company and to perform its obligations under this Agreement.

• The execution, delivery, and performance of this Agreement have been duly authorized by all necessary actions on the part of the Lender.

• This Agreement constitutes a legal, valid, and binding obligation of the Lender, enforceable against the Lender in accordance with its terms.

Section 4: Covenants

4.1 Affirmative Covenants: The Company hereby covenants to the Lender that, so long as the Loan remains outstanding, it shall:

• Maintain its legal existence and good standing in the jurisdiction of its incorporation and in any jurisdiction in which the failure to do so could materially affect its business.

• Provide to the Lender, within [Number of Days] days after the end of each fiscal quarter, unaudited financial statements, and within [Number of Days] days after the end of each fiscal year, audited financial statements.

• Comply with all laws, regulations, and ordinances applicable to its business operations, where failure to comply could have a material adverse effect on its ability to perform its obligations under this Agreement.

4.2 Negative Covenants: The Company further covenants that, without the prior written consent of the Lender, it will not:

• Incur additional indebtedness beyond a certain threshold specified herein.

• Sell, transfer, lease, or dispose of a material part of its assets outside the normal course of business.

• Enter into any merger, consolidation, or other form of business combination that could materially affect its ability to repay the Loan.

Section 5: Security and Collateral

5.1 Collateral Description: To secure the repayment of the Loan and all obligations hereunder, the Company grants to the Lender a security interest in [Specify Collateral], including but not limited to [List of Assets if applicable].

5.2 Perfection of Security Interest: The Company agrees to take all necessary steps, including filing any required Uniform Commercial Code (UCC) financing statements, to perfect the Lender's security interest in the collateral described herein.

5.3 Insurance: The Company shall maintain insurance on the collateral in amounts and types satisfactory to the Lender and shall provide proof of such insurance upon the Lender's request.

Section 6: Events of Default

6.1 Definition of Default: An event of default shall occur if any of the following conditions are met:

• The Company fails to make any payment of principal or interest on the due date and such failure continues for a period of [Number of Days] days.

• The Company breaches any covenant or agreement set forth in this Agreement and fails to cure such breach within [Number of Days] days after receiving notice from the Lender.

• The Company becomes insolvent, files for bankruptcy, or is subject to bankruptcy proceedings initiated by a third party.

6.2 Remedies on Default: Upon the occurrence of an event of default, the Lender may, at its option, declare all outstanding amounts under the Loan to be immediately due and payable and may exercise any other rights and remedies available under applicable law, including but not limited to seizing and selling the collateral.

6.3 Notice and Cure Period: Notwithstanding the above, the Lender shall provide the Company with written notice of any default, and the Company shall have the opportunity to cure said default within the cure period specified herein before the Lender exercises its rights and remedies.

Section 7: Amendment and Waiver

7.1 Amendments: This Agreement may be amended, modified, or supplemented only by a written instrument signed by both the Company and the Lender.

7.2 Waiver: The waiver by either party of a breach of any provision of this Agreement shall not operate as or be construed as a waiver of any subsequent breach. No waiver shall be effective unless it is in writing and signed by the waiving party.

Section 8: Confidentiality

8.1 Confidential Information: Both parties acknowledge that in the course of this Agreement, they may receive information that is proprietary or confidential to the other party. Such information shall be kept confidential and not disclosed to third parties except as required by law or to enforce the terms of this Agreement.

8.2 Survival: The obligations to maintain confidentiality shall survive the termination or expiration of this Agreement.

Section 9: Governing Law and Dispute Resolution

9.1 Governing Law: This Agreement shall be governed by and construed in accordance with the laws of [Specify Jurisdiction], without regard to its conflict of law principles.

9.2 Dispute Resolution: Any disputes arising out of or in connection with this Agreement shall first be attempted to be resolved through good faith negotiations between the parties. If such negotiations fail, the dispute shall be submitted to arbitration under the rules of [Specify Arbitration Body] and shall be conducted in [Specify Location].

Section 10: Termination

10.1 Termination for Cause: Either party may terminate this Agreement upon written notice if the other party materially breaches any of its obligations under this Agreement and fails to cure such breach within a specified cure period.

10.2 Effect of Termination: Upon termination, all outstanding obligations under this Agreement become immediately due and payable.

Section 11: Miscellaneous Provisions

11.1 Notices: All notices, requests, consents, and other communications required or permitted under this Agreement shall be in writing and shall be deemed received when delivered personally, sent by certified or registered mail, or by reputable overnight courier, to the addresses specified herein.

11.2 Entire Agreement: This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements and understandings, both oral and written.

11.3 Binding Effect: This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, provided that neither party may assign its rights or obligations hereunder without the prior written consent of the other party.

11.4 Counterparts: This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

Section 12: Signatures

IN WITNESS WHEREOF, the parties hereto have executed this Startup Debt Financing Agreement as of the date first above written.

FOR THE COMPANY

[Signature]

[Name]

[Title]

[Date]

FOR THE LENDER

[Signature]

[Name]

[Title]

[Date]

Startup Templates @ Template.net