The loan agreement everything investor needs to know

Договор займа все, что нужно знать инвестору

In the classic sense the investments are the investments in currencies, securities and other assets that can bring profit. Startups, business, venture projects are also potential assets to invest in which there are several ways:

  • to acquire shares of the company. Issue of shares is an expensive project, which is preferable for large businesses;

  • to buy bonds. Bond issue is easier, but also requires the costs of organizing the process. When talking about the amount of 50-100 thousand dollars, bonds are not suitable;

  • to invest in special services or companies that Finance the business. For example, banks or MFIs;

  • find an attractive business at crowdinvesting or crowdlending platforms;

  • to make a contract of an investment loan.

Agreement of an investment loan is a document with legal force, which regulates relationship between the borrower and the lender. The amount, term, interest rate and repayment terms are negotiated individually and are written in the contract. The contract may be accompanied by the registration of pledge.

There are different ways of registering of this document. In different sources you can find such splitting as an investment contract, loan agreement, partner agreement. They all have a certain form, registration rules and are regulated at the legislative level.

The agreement of the investment loan

Objectives of investment (loan) may be buying equipment or real estate, the expansion of production (purchase of working capital). The agreement of the investment loan must have a strictly specific purpose, in particular the replenishment of the capital of the company at the expense of borrowed funds is not welcome.

The clauses of the contract of an investment loan that investor should pay attention to:

  • method of money transfer and their return. Any profits subject to tax because the transfer of money in the witness by cash, bank transfer, etc. — all this is of fundamental importance;

  • there is a sense if entering guarantors into the contract;

  • terms of termination of the contract, the penalty (loss of interest) etc.;

  • conditions of force majeure (it makes sense to consider protection from the sharp growth of the rate).

In theory, free loans or loans without interest can be granted only for personal purpose. In practice everything is different. To work around the issue of taxation of profits, investment loan agreement pre-signed on the loan with interest. In other words, the loan amount is less than the amount in the contract for the accrued interest. Because the terms of early termination pay maximum attention. You can ask the insurance collateral, but for the borrower it is not profitable.

The ways of verifying of trustworthiness of the borrower:

  • legal examination according to the passport code and information about the availability of litigation, penalties, unpaid fines, debts, etc.;

  • verification of sources of income for the last 6-12 months (financial statements, income statement etc.);

  • a detailed assessment of the business plan to understand how to generate profits;

  • the best option — notarization of the contract of pledge of real estate;

  • the presence of family, children, etc. will be a plus (indicator of stability), permanent residence at the same address also will be a plus;

  • in special cases recommendations from previous employers or lenders can help (whose reliability is checked similarly).

Under the law, the contract of an investment loan may be in oral, written and notarial form. Under an oral implied private debt, conditionally, “until salary”, the court considered only on the basis of testimony. The collection efficiency is almost zero.

The principles of the contract of investment loan:

  • abbreviations in the text of the contract are not allowed. The text must have clear interpretation to both parties;

  • all figures (amount, date) are put down with the number and the words;

  • it is necessary to specify all passport data of both parties, including code;

  • the amount of the penalty must comply with the legislation in order to exclude even a partial rescission of a contract.

Important: notaries do not agree to certify all contracts. Although the notarial contract is a safety net for the investor, a written agreement also have legal force. After repayment of the loan both parties sign a receipt saying that they have no claims to each other.

We hope this basic information was useful to you.

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