Loan agreement review checklist
Commercial loan agreements require careful review of covenants and security — a narrow financial covenant can trigger default during ordinary trading. This checklist walks through a borrower-side review.
This is a 12-step checklist for reviewing a commercial loan agreement. It covers the facility terms, interest, security, financial covenants, representations, and default and enforcement mechanics.
The checklist
Check facility type and amount
Confirm the facility type (term, revolving, bill) and the maximum facility amount.
Review interest and fees
Check the interest rate, margin, line fee, commitment fee, and early repayment fees.
Check conditions precedent
Review all conditions precedent to drawdown — legal opinions, security perfection, insurance, valuations.
Review representations and warranties
Check the reps and warranties, when they are repeated, and the scope of any qualifications.
Check financial covenants
Review interest cover, gearing, LVR, and any other financial covenants, and test headroom.
Review information undertakings
Check financial statement delivery, compliance certificates, and ad hoc information rights.
Check negative covenants
Review restrictions on debt, disposals, distributions, acquisitions, and change of business.
Review security documents
Check the security documents — GSA, real property mortgage, guarantees — and PPSR registrations.
Check events of default
Review the events of default, cross default thresholds, and any grace periods.
Check acceleration and enforcement
Review the lender's rights on default — acceleration, enforcement, and receivership.
Check assignment and syndication
Review the lender's right to assign or syndicate the facility.
Check governing law and jurisdiction
Confirm the governing law, jurisdiction, and any service of process arrangements.
When this checklist applies
Use this checklist when acting for a borrower reviewing a bank facility, a private credit deal, or an intercompany loan.
Common pitfalls
- Tight financial covenants with no headroom
- Missing cross default trigger from intercompany arrangements
- Security documents over-registered on PPSR
- Ambiguous change of control or material adverse effect clauses
- Not checking conditions precedent before signing
Run this checklist on a real matter
Quillio reviews loan agreements, tests financial covenants, and drafts borrower comments. See /practice-areas/commercial-lawyers or start a free trial.
This checklist is a general guide. Always confirm covenant headroom with the client's finance team before signing.
Use this checklist on your matter.
Quillio can run this checklist on a specific NSW conveyancing matter — confirm each item, calculate adjustments, and generate the supporting documents. The free trial requires no credit card.
Start your free trial