Free Washington DC Loan Agreement

What’s Included in The Loan Agreement in Washington DC?

A loan agreement refers to the legally binding agreement between a lender and a borrower (business or individual). This agreement also lays out the details of the relationships, roles, and obligations for each of the parties, which is why this document is essential for both lenders and borrowers. If you are a borrower, you could think of the loan agreement as to the binding contractual agreement that requires the lender to release the amount of money agreed and to honor waivers and default requests appropriately, while also giving you documentation that you can go back to track and record your repayments. The lender needs this written agreement as well for use in tracking payments, and in the event of a dispute, the lender will be able to go back to the terms the borrower agreed to for legal recourse. This agreement is an irrefutable document that allows each party to stick to their end of the agreement. As long as the persons signing the contract are of age and have the capacity to make such binding decisions, the agreement will be enforceable, and one cannot feign ignorance.

And speaking of ignorance, it would not be a good idea for you to walk into the negotiation table with an idea of what the terms and the provisions of the agreement are. Which is why downloading the editable version of the free Washington DC loan agreement form is a great idea. Besides being a legal loan agreement template that you can use to process a loan if you are the one offering a loan of a substantial amount of money to family, friends, or a business, this agreement is ideal for borrowers too as it offers them the opportunity to review some of the expected provisions. The loan agreement template will also familiarize you with the complex terms and boilerplate language often used by lenders. Since everything is negotiable in business loan contracts, the contract sample means that you will be aware of some of these contracts, hence the capacity to ask for a better offer.

Now that you have an idea as to why the loan agreement in Washington, DC, is an important document where loans are concerned. Let’s look at the important sections and provisions of the loan agreement.

The Effective Date

The effective date is the date that the loan agreement is signed and the loan disbursed.

Parties to the agreement

The agreement also specifies who the parties to the agreement are, as well as their relationships with each other, and how the parties would like their relationship defined.

The Loan amount

This amount is the total amount of money that the lender lends the borrower. The interest is often charged on top of the loan amount at a specific percentage, and the total of the interest topped to the principal amount. Note that the principal amount is less than the loan amount, and it is the exact amount of money that is disbursed to the borrower when the loan agreement is processed.

In addition to understanding these differences, you also need to check and understand how the lender is calculating the interest – whether on a simple interest basis that leaves you with the same monthly repayment or on a compounding interest where the numbers will differ depending on the principal amount that remains unpaid after each monthly repayment.

Then there’s the state’s usury laws and the maximum rate of interest charged by lenders. In a bid to protect consumers, the Washington DC state has placed limitations on the interests that lenders are allowed to charge on loans. Without a written agreement, the maximum rate of interest legally charged in a loan is 6%, but if there is a written contract, then the interest rate capping is at 24%. Lenders who charge interests exceeding these percentages are punishable by law, and they will be required to forfeit interest, with the usurious interest already paid by the borrower recovered. In case of legal judgments, the acceptable rate of interest is 4%, and in the absence of a written contract, the rate charged will be 70% of the interest rate specified by the Secretary of Treasury.

Note, however, that these usury laws do not apply to the Federally-insured banks, loans, and savings or the direct installment loans for motor vehicles.

Repayment schedule

Think of it as the amortization table that breaks down how you will repay the loan, and for how long.


Collateral on loan is the property or business asset that is specified as the security for the loan. Collateral might be anything from a building and land to your home or ownership stake in a company. With this in mind, you need to think hard about the terms of the loan and whether you are really willing to put that asset on the line.

Default penalties

This section of the agreement lays out the steps that will be taken by the lender in case you default on payments. It has terms for cure periods and also specifies the grace period given by lenders before the penalties kick in or foreclosure.

To get started with loan contracts in Adams Morgan, Shaw, Chevy Chase, Bloomingdale, or any other city in Washington’s District of Columbia, download our free loan agreement form here.