What is a director’s loan agreement?

A director’s loan agreement records money lent between a company and one of its directors, including repayment obligations and any interest charged.

What is a shareholder loan agreement?

A shareholder loan agreement records a loan made between a company and one of its shareholders, often used to support business funding.

What should be included in a UK loan agreement?

A written loan agreement should include the loan amount, interest rate, repayment schedule, parties’ details, default terms, and whether the loan is secured or unsecured.

Can interest be charged under a UK loan agreement?

Yes, interest can be charged if the agreement clearly states the interest rate, how it is calculated, and when it must be paid.

Is a loan agreement legally binding in the UK?

A written loan agreement can be legally binding in the UK if it includes clear terms, is agreed by both parties, and meets basic contract law requirements.

Can a loan agreement be verbal in the UK?

Yes. A verbal loan can be legally valid, but it is much harder to prove the terms if there is a dispute.

When should I use a secured loan agreement?

You should use a secured loan agreement when the lender requires an asset as security in case the borrower fails to repay.

What is the difference between a simple and detailed loan agreement?

A simple loan agreement is suitable for straightforward loans with basic repayment terms, while a detailed agreement is better for larger sums, business loans, or secured lending.

Can a UK loan agreement allow early repayment?

Yes. A loan agreement can include early repayment terms, including whether the borrower may repay early without penalty.

How can I create the right type of UK loan agreement?

You can use the main loan agreement document generator to create a tailored UK loan agreement based on the type of loan and repayment terms you need.

EN-GB>Finance>Loan Agreement>UK Loan Agreement Types Guide

UK Loan Agreement Types

Created: 9 Jun 2026

Explore the main UK loan agreement types and when each may be used. This guide helps you choose suitable terms and links to AI Generated British Loan Agreement resources for practical document creation.

Loan Context	Typical Use Case	Security Position	Complexity Level	Key Considerations
Family Loan Agreement
Personal	Money lent between relatives, often for a house deposit, education costs or short-term support.	Unsecured	Low	Record whether the money is a loan or gift, repayment date, interest, default and evidence of transfers.
Friends Loan Agreement
Personal	Informal lending between friends where both parties want written repayment terms.	Unsecured	Low	Define amount, repayment timetable, interest, missed payment consequences and whether early repayment is allowed.
Personal Unsecured Loan Agreement
Personal	A private personal loan with no collateral supporting repayment.	Unsecured	Low	Check whether consumer credit regulation applies, especially if lending is by way of business.
Personal Secured Loan Agreement
Personal, Property	A personal loan backed by specific assets, commonly property or valuable goods.	Secured	Medium	Security must be properly created, documented and registered where required regulated credit rules may apply.
On-Demand Loan Agreement
Personal, Business, Director or shareholder, Intra-group	Loan repayable whenever the lender demands repayment, often used for flexible short-term funding.	Either	Low	Demand process, notice period, interest until repayment and practical cash-flow impact on the borrower.
Fixed-Term Loan Agreement
Personal, Business, Property, Director or shareholder, Intra-group	Loan with a set maturity date and defined repayment obligations.	Either	Low	State maturity date, repayment schedule, interest periods, prepayment rights and default triggers.
Instalment Loan Agreement
Personal, Business	Borrower repays capital and interest through regular scheduled payments.	Either	Low	Include payment dates, amortisation, allocation of payments, late fees and early settlement rights.
Bullet Repayment Loan Agreement
Business, Property, Director or shareholder, Intra-group	Interest is paid during the term and principal is repaid in one amount at maturity.	Either	Medium	Assess refinancing risk, maturity repayment source, interest payments and default if the bullet is missed.
Interest-Free Loan Agreement
Personal, Business, Director or shareholder, Intra-group	Loan where the parties agree no interest is payable.	Either	Low	Consider tax, benefit-in-kind, transfer pricing and whether no-interest terms create accounting issues.
Business Loan Agreement
Business	General funding for a company, LLP, partnership or sole trader.	Either	Medium	Include purpose, repayment, representations, covenants, information rights, events of default and security if required.
SME Loan Agreement
Business	Funding for a small or medium-sized UK business for working capital or growth.	Either	Medium	Balance lender protections with practical covenants, reporting obligations and business cash-flow needs.
Working Capital Loan Agreement
Business	Short-term funding to cover payroll, stock, suppliers or seasonal cash-flow gaps.	Either	Medium	Set drawdown availability, repayment source, working capital reporting and limits on further debt.
Revolving Credit Facility Agreement
Business, Intra-group	Facility allowing repeated drawdowns and repayments up to a committed limit.	Either	High	Needs availability mechanics, utilisation requests, commitment fees, cancellation, covenants and default controls.
Overdraft Facility Letter
Business, Personal	Bank account facility permitting borrowing up to an agreed overdraft limit.	Either	Medium	Usually repayable on demand document limit, interest, review dates, fees and cancellation rights.
Asset Finance Loan Agreement
Business	Funding used to buy business equipment, vehicles or machinery.	Secured	Medium	Identify asset, ownership, maintenance, insurance, repossession rights and whether hire purchase is more appropriate.
Equipment Loan Agreement
Business	Business loan to fund purchase or refinancing of specific equipment.	Secured	Medium	Asset description, title, maintenance, insurance, depreciation, security enforcement and sale restrictions.
Invoice Finance Facility Agreement
Business	Funding advanced against unpaid customer invoices or receivables.	Secured	High	Receivables eligibility, assignment, concentration limits, debtor notices, recourse and verification rights.
Stock Finance Agreement
Business	Funding secured against inventory or stock held by a trading business.	Secured	High	Valuation, monitoring, insurance, retention of title claims, stock rotation and enforcement practicality.
Trade Finance Loan Agreement
Business	Funding imports, exports, purchase orders or supply-chain transactions.	Either	High	Documents, shipping risk, FX exposure, supplier payments, receivables assignment and sanctions compliance.
Acquisition Finance Loan Agreement
Business	Funding a company or business acquisition.	Secured	High	Conditions precedent, acquisition documents, leverage, financial assistance restrictions, security and post-completion covenants.
Management Buyout Loan Agreement
Business, Director or shareholder	Finance provided to a management team or acquisition vehicle to buy a business.	Secured	High	Equity contribution, subordination, acquisition documents, conflicts, warranties and target group security.
Project Finance Loan Agreement
Business, Property	Funding a ring-fenced project where repayment depends mainly on project cash flows.	Secured	High	Due diligence, step-in rights, construction risk, revenue contracts, reserve accounts and security package.
Syndicated Loan Agreement
Business, Property	Large loan provided by multiple lenders under one coordinated facility agreement.	Either	High	Agency provisions, lender voting, transfer rights, pro rata sharing, security trustee and amendment mechanics.
Bilateral Facility Agreement
Business, Property	Business loan facility between one lender and one borrower or borrower group.	Either	Medium	Facility size, conditions precedent, covenants, drawdown mechanics, fees, defaults and security.
Mezzanine Loan Agreement
Business, Property	Higher-risk junior debt sitting behind senior debt, often in acquisitions or property deals.	Secured	High	Intercreditor terms, payment blockage, second-ranking security, equity warrants and higher pricing.
Subordinated Loan Agreement
Business, Director or shareholder, Intra-group	Debt agreed to rank behind senior creditors on insolvency or enforcement.	Either	High	Subordination wording, payment restrictions, insolvency ranking, turnover provisions and intercreditor consistency.
Convertible Loan Agreement
Business, Director or shareholder	Debt that may convert into shares, commonly used for startup or growth investment.	Unsecured	High	Conversion trigger, valuation cap, discount, qualifying round, shareholder approvals and Companies Act allotment rules.
Convertible Loan Note Instrument
Business, Director or shareholder	Instrument creating loan notes that can convert into shares under defined conditions.	Unsecured	High	Investor rights, transferability, conversion mechanics, interest, redemption, pre-emption and securities law issues.
Loan Note Instrument
Business, Director or shareholder, Intra-group	Company issues debt securities to one or more noteholders.	Either	High	Redemption, transferability, noteholder meetings, listing, financial promotion and withholding tax.
Director Loan Agreement
Director or shareholder, Business	Loan between a company and one of its directors, in either direction.	Either	Medium	Check shareholder approval, conflicts, tax on overdrawn loan accounts and board authorisation.
Director-to-Company Loan Agreement
Director or shareholder, Business	Director lends personal funds to support company cash flow or expansion.	Either	Low	Record interest, repayment priority, subordination to bank debt and board approval of connected-party terms.
Company-to-Director Loan Agreement
Director or shareholder, Business	Company lends money to a director or connected person.	Either	Medium	May require member approval consider corporation tax charge on close company loans and benefit-in-kind rules.
Shareholder Loan Agreement
Director or shareholder, Business	Shareholder lends to, or borrows from, a company outside ordinary share capital.	Either	Medium	Address ranking, repayment, interest, conflicts, minority protections and subordination to external lenders.
Shareholder-to-Company Loan Agreement
Director or shareholder, Business	Shareholder injects repayable funds into the company instead of buying more shares.	Either	Low	Clarify whether funds are debt or equity, repayment priority, interest and treatment on sale or insolvency.
Company-to-Shareholder Loan Agreement
Director or shareholder, Business	Company advances money to a shareholder, often in a close company context.	Either	Medium	Check distributable profits, close company tax rules, connected persons and whether the payment is a disguised distribution.
Founder Loan Agreement
Director or shareholder, Business	Startup founder lends money to the company before external investment or revenue.	Unsecured	Low	Keep terms investor-friendly address repayment deferral, conversion, interest and conflicts with future funding rounds.
Employee Loan Agreement
Personal, Business	Employer lends to an employee for travel, relocation, training or hardship support.	Unsecured	Medium	Payroll deductions need written authority consider taxable cheap loan benefit and termination repayment.
Relocation Loan Agreement
Personal, Business	Employer-funded loan to help an employee move home for work.	Unsecured	Low	Address repayment if employment ends, payroll deduction consent and tax treatment of employment-related loans.
Training Cost Loan Agreement
Personal, Business	Employer funds training costs to be repaid if conditions are not met.	Unsecured	Medium	Avoid penalty-style repayment include sliding scale, deduction consent and employment law fairness.
Intercompany Loan Agreement
Intra-group, Business	Loan between companies in the same corporate group.	Either	Medium	Arm's-length terms, transfer pricing, corporate benefit, withholding tax and board approvals.
Parent-to-Subsidiary Loan Agreement
Intra-group, Business	Parent company funds a subsidiary for operations, investment or restructuring.	Either	Medium	Document commercial purpose, repayment capacity, transfer pricing, thin capitalisation and local law constraints.
Subsidiary-to-Parent Loan Agreement
Intra-group, Business	Subsidiary lends surplus cash to its parent company or treasury vehicle.	Either	Medium	Check corporate benefit, distributable reserves concerns, directors' duties, transfer pricing and insolvency risk.
Group Cash Pooling Loan Agreement
Intra-group, Business	Group companies centralise cash balances with a treasury company or lead bank.	Either	High	Set pooling mechanics, set-off, interest allocation, transfer pricing, insolvency separation and bank documentation.
Group Treasury Loan Agreement
Intra-group, Business	Central treasury company lends to group entities under standardised intra-group terms.	Either	High	Benchmark pricing, FX risk, withholding tax, cross-border enforcement and local corporate approvals.
Bridge Loan Agreement
Property, Business, Personal	Short-term finance pending sale, refinance, investment round or completion of another transaction.	Secured	High	Exit route, default interest, valuation, security, fees and regulated mortgage activity if secured on a home.
Property Development Finance Agreement
Property, Business	Loan funding land purchase, construction or refurbishment for a development project.	Secured	High	Drawdowns tied to monitoring surveyor reports, planning, cost overruns, pre-sales, warranties and exit finance.
Commercial Property Loan Agreement
Property, Business	Loan to buy or refinance offices, shops, warehouses or other commercial premises.	Secured	High	Valuation, title, leases, environmental issues, loan-to-value covenant, insurance and security registration.
Buy-To-Let Loan Agreement
Property, Personal, Business	Loan secured on a residential investment property let to tenants.	Secured	High	Check whether consumer buy-to-let rules apply, rental cover, tenancy terms, licensing and mortgage conditions.
Second Charge Loan Agreement
Property, Personal, Business	Loan secured by a second-ranking charge over property behind a first mortgage lender.	Secured	High	Needs first lender consent, priority arrangements, Land Registry registration and possible FCA mortgage regulation.
Legal Charge Secured Loan Agreement
Property, Business, Personal	Loan agreement supported by a legal charge over registered or unregistered land.	Secured	High	Charge must be correctly executed, registered at Land Registry and, for companies, often at Companies House.
Debenture Secured Loan Agreement
Business	Business loan secured by a company debenture over multiple asset classes.	Secured	High	Register company charges within 21 days define fixed and floating charge assets and enforcement rights.
Share Charge Loan Agreement
Business, Director or shareholder	Loan secured over shares held by a borrower or obligor.	Secured	High	Check company articles, share certificates, blank transfers, control rights, financial assistance and perfection steps.
Personal Guarantee Supported Loan Agreement
Business, Property, Director or shareholder	Business or property loan where an individual guarantees repayment.	Either	Medium	Guarantor should understand liability, independent advice expectations, demand process and limitation periods.
Cross-Guarantee Group Loan Agreement
Business, Intra-group	Group companies guarantee each other's liabilities under a group facility.	Either	High	Corporate benefit, financial assistance, guarantee limitations, board approvals and insolvency clawback risk.
Refinancing Loan Agreement
Business, Property, Personal, Intra-group	New loan used to repay and replace existing debt.	Either	Medium	Coordinate repayment, release of existing security, new security, break costs and priority arrangements.
Debt Consolidation Loan Agreement
Personal, Business	One loan used to repay several existing debts and simplify repayment.	Either	Medium	Compare total cost, term extension, security risk, early repayment fees and consumer credit protections.
Promissory Note
Personal, Business	Short written promise to pay a specified sum, often simpler than a full loan agreement.	Unsecured	Low	May be negotiable include clear parties, amount, due date, interest and whether transfer is permitted.
Term Sheet For Loan Facility
Business, Property, Intra-group, Director or shareholder	Non-binding heads of terms used before a detailed loan agreement is prepared.	Either	Medium	Mark binding and non-binding terms, exclusivity, fees, confidentiality and conditions to lending.
Facility Letter
Business, Property, Personal	Short-form lender letter setting out terms of a loan or credit facility.	Either	Medium	Ensure acceptance, conditions, repayment, pricing, security and incorporated standard terms are clear.
Loan Amendment And Restatement Agreement
Business, Property, Intra-group, Director or shareholder	Existing loan is amended and restated into an updated full agreement.	Either	High	Preserve security, guarantees and priority obtain consents and avoid unintended novation or release.
Loan Variation Agreement
Personal, Business, Property, Director or shareholder, Intra-group	Parties change existing loan terms such as maturity, interest or repayment dates.	Either	Medium	Check guarantor consent, secured creditor priority, regulatory re-documentation and board or member approvals.
Forbearance Agreement
Business, Property, Personal	Lender agrees temporarily not to enforce after default, subject to conditions.	Either	High	Reserve rights, acknowledge defaults, set cure plan, require waivers and preserve security and guarantees.
Loan Assignment Agreement
Business, Property, Personal, Intra-group	Existing lender transfers loan rights to a new lender or group company.	Either	Medium	Notice to debtor, transfer restrictions, security transfer, data protection and whether novation is needed.
Loan Novation Agreement
Business, Property, Personal, Intra-group	Original loan party is replaced by a new party with consent of all relevant parties.	Either	Medium	May release old obligations preserve guarantees, security, priority and regulatory status by express drafting.
Peer-To-Peer Lending Agreement
Personal, Business	Loans arranged through an online platform between investors and borrowers.	Either	High	Platform authorisation, client money, consumer credit status, disclosure and assignment mechanics are important.
Crowdfunding Loan Agreement
Business, Personal	Multiple lenders advance funds to a borrower through a crowdfunding structure.	Either	High	Regulatory permissions, investor communications, platform terms, lender voting and enforcement coordination.
Partnership Loan Agreement
Business	Loan to or from a partnership, LLP or partner in a trading structure.	Either	Medium	Check partner authority, liability, partnership deed, profit drawings and security over partnership assets.
LLP Member Loan Agreement
Business, Director or shareholder	LLP member lends money to, or borrows from, the LLP.	Either	Medium	Review LLP agreement, member authority, capital accounts, tax treatment and insolvency repayment risk.
Charity Loan Agreement
Business, Property	Loan to or by a charity for operations, property or social investment.	Either	High	Trustee powers, charity benefit, conflicts, secured borrowing, disposal restrictions and Charity Commission guidance.
Loan To Trustees Agreement
Personal, Property, Business	Loan made to trustees for trust property, investment or beneficiary funding purposes.	Either	High	Confirm trustee borrowing powers, liability limits, trust assets, indemnities and beneficiary interests.
Hire Purchase Agreement
Personal, Business	Goods are hired with an option or obligation to purchase after instalments are paid.	Secured	High	Consumer hire purchase may be regulated ownership, termination, repossession and statutory notices matter.
Conditional Sale Agreement
Personal, Business	Buyer pays by instalments and title passes only when conditions are met.	Secured	High	Consumer credit rules, title retention, repossession rights, default notices and total price disclosures.
Sale And Leaseback Financing Agreement
Business, Property	Owner sells an asset and leases it back to release capital while retaining use.	Secured	High	Sale validity, lease terms, accounting, tax, registration, asset control and recharacterisation risk.
Vendor Loan Agreement
Business, Property	Seller finances part of the purchase price owed by the buyer.	Either	Medium	Align with sale agreement, retention of title or security, repayment source and buyer default remedies.
Deferred Consideration Loan Agreement
Business, Property	Unpaid sale price is structured as a repayable debt after completion.	Either	Medium	Coordinate with warranties, set-off rights, completion accounts, security and acceleration on buyer default.
Earn-Out Loan Agreement
Business	Contingent acquisition payment is documented as debt once earn-out conditions are met.	Unsecured	High	Define earn-out trigger, accounts basis, dispute process, set-off, tax and repayment timing.
Start-Up Loan Agreement
Business, Director or shareholder	Early-stage company borrows money before revenue, investment or bank finance is available.	Unsecured	Medium	Cash runway, founder guarantees, conversion rights, repayment deferral and compatibility with future investment.
Social Enterprise Loan Agreement
Business	Loan funding a community interest company, charity trading arm or social enterprise.	Either	Medium	Mission restrictions, asset locks, grant conditions, social impact covenants and board approvals.
Community Interest Company Loan Agreement
Business	Loan to or from a CIC for community-purpose activities or asset funding.	Either	Medium	Check asset lock, community benefit, dividend and interest caps, security and regulator requirements.
Agricultural Loan Agreement
Business, Property	Finance for farms, rural land, livestock, machinery or seasonal agricultural cash flow.	Either	Medium	Seasonality, land title, tenancies, subsidies, livestock security, equipment and environmental compliance.
Professional Practice Loan Agreement
Business	Funding for law, accountancy, dental, medical or other professional practices.	Either	Medium	Partnership terms, professional regulation, drawings, goodwill valuation, partner guarantees and client account separation.
Franchise Finance Loan Agreement
Business	Loan to buy, launch or expand a franchise business.	Either	Medium	Review franchise agreement, franchisor consent, step-in rights, territory, fees and business plan assumptions.
Intellectual Property Secured Loan Agreement
Business	Loan secured against patents, trade marks, copyright or other intellectual property assets.	Secured	High	Value IP, identify ownership, register security where relevant, preserve licences and manage enforcement risk.

Which UK Loan Agreement Type Should You Use?

The right form depends mainly on who is lending, why the money is being borrowed, and whether repayment is backed by security. Simple family, friend, employee, director or shareholder loans are often documented with a short unsecured agreement, but property finance, business acquisition finance, intra-group lending and loans supported by debentures or legal charges usually need more detailed drafting.

When Is A Secured Loan Agreement Needed In The UK?

A loan is usually documented as secured where the lender expects recourse to specific assets if the borrower defaults, such as land, shares, receivables, equipment or wider company assets. Company security is commonly registered at Companies House under the Companies Act 2006, Part 25, and land security will normally involve Land Registry requirements.

Which Loan Agreements Need Extra Regulatory Care?

Some lending arrangements may be regulated consumer credit or mortgage activity, especially personal loans, hire purchase, conditional sale, second charge lending and bridging or development finance involving individuals. The Consumer Credit Act 1974 and FCA perimeter rules can affect form, wording, disclosures, enforcement and whether the lender needs authorisation.

What Are The Most Important Drafting Points?

Repayment mechanics: on-demand, fixed-term, instalment, bullet, revolving and bridge loans all need different repayment wording.
Interest: interest rate, default interest, compounding, withholding tax and whether interest is paid or rolled up should be clear.
Security: secured business and property loans should identify the collateral and any separate debenture, legal charge, share charge or assignment.
Company approvals: director, shareholder and intra-group loans may need board minutes, shareholder approvals, distributable profits analysis or conflicts management.
Default rights: business and property loans often need events of default, acceleration, financial covenants and information undertakings.

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FAQs

What are the main types of loan agreements in the UK?

The main types include personal loan agreements, business loan agreements, secured loan agreements, unsecured loan agreements, shareholder loan agreements, director loan agreements, and family or friends loan agreements.

What is the difference between a secured and unsecured loan agreement?

When should I use a personal loan agreement?

What is a business loan agreement?

Do I need a loan agreement for lending money to family or friends?

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