Credit Line Arrangement Variable Rate of Interest – Repayable On Demand
REVOLVING CREDIT LINE
Sub – Establishment of Revolving Credit Facility
[Lender name], the lender is happy to propose to set up a revolving credit facility in the figure and on the terms mentioned below:
Borrower – [Borrower name]
Credit Facility – Revolving credit line in the limit of $[Highest loan amount] (the ‘Credit’).
Purpose – [State purpose for which loan is to be sanctioned]
Interest – The interest on the total principal amount and, past due interest compounded monthly will be payable every month – on the first day of every month throughout the period of the Credit, and, also as before demand for payment or judgment, or together at a per annum price equal to the prime interest rate declared by the [bank name] from time to time, as a reference rate in effect for decisive interest rates on commercial loans plus [mention the % above prime lender].
Term & Maturity – The Credit are repayable on demand.
Availment – [date on which loan proceeds are available to be advanced]
Security – [State any security the borrower gives – guarantees, mortgages etc.]
Positive Covenants – Till the time the amounts due for the Credit are paid in full, the borrower agrees to do the following:
[State here the affirmative points the borrower agrees on – e.g. the borrower will give financial statements every month to the lender etc.]
Negative Covenants – Till the due amounts are paid in full, the borrower shall not, without the written approval form the Lender, do any of these:
[State her any negative covenants of the borrower – e.g., the borrower will not take a loan from any other person/association.]
Accepted ______________________, 20___