Loan agreement, secured equipment facility

Loan agreement template

A Tasmanian foundry is borrowing $180,000 from a private investment company to buy a used induction furnace. The lender is not a bank, so everything a bank would take for granted has to be written down: what has to happen before the money moves, what is registered over what, and how long the borrower gets to fix a default.

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Loan agreement · Ardent Nominees Pty Ltd and Delta Foundry Pty LtdPage 2 of 9
Loan agreement · Ardent Nominees Pty Ltd and Delta Foundry Pty LtdPage 3 of 9
Loan agreement · Ardent Nominees Pty Ltd and Delta Foundry Pty LtdPage 4 of 9
Loan agreement · Ardent Nominees Pty Ltd and Delta Foundry Pty LtdPage 5 of 9
Loan agreement · Ardent Nominees Pty Ltd and Delta Foundry Pty LtdPage 6 of 9
Loan agreement · Ardent Nominees Pty Ltd and Delta Foundry Pty LtdPage 7 of 9
Loan agreement · Ardent Nominees Pty Ltd and Delta Foundry Pty LtdPage 8 of 9
Loan agreement · Ardent Nominees Pty Ltd and Delta Foundry Pty LtdPage 9 of 9

This agreement is made on 14 September 2026 between Ardent Nominees Pty Ltd ACN 618 330 774 of 22 Bellerive Parade, Hobart TAS 7000, called the Lender, and Delta Foundry Pty Ltd ACN 142 908 651 of 8 Kiln Road, Derwent Park TAS 7009, called the Borrower.

The Borrower operates a small non ferrous casting foundry. It is borrowing to buy a used induction melting furnace and to install three phase supply for it. The Lender is a private investment company and is not a licensed credit provider, which is why clause 2.2 matters.

The Lender lends $180,000 to the Borrower for the sole purpose of purchasing and installing plant described in Schedule 1. The Borrower must not apply any part of it to another purpose without written consent.
The Borrower declares that the loan is wholly for business purposes. On that basis the National Credit Code does not apply to this agreement. The Borrower signs a separate business purpose declaration on the same date as this agreement.
The loan is advanced in one amount to the Borrower nominated account within five business days of the last of the conditions in clause 3 being met, and no later than 30 September 2026.
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Interest accrues at 8.50 percent per annum on the balance outstanding, calculated monthly in arrears on the balance at the start of each month and included in the instalment.
The rate does not change during the term. There is no establishment fee, no monthly account fee and no early repayment fee.
An amount not paid within seven days of its due date carries additional interest at 4 percent per annum above the rate in clause 4.1, from the due date until it is paid. Default interest is not capitalised.
The Borrower pays 60 monthly instalments of $3,692.98 by direct debit on the first day of each month, beginning 1 October 2026 and ending 1 September 2031. Where the first falls on a weekend or public holiday, the debit is taken on the next business day.
Each payment is applied first to default interest, then to interest, then to principal.

The first six instalments are set out below so both parties can see how little of an early payment reduces the principal. The full schedule is Schedule 2.

The Borrower may repay part or all of the loan at any time without penalty. A part payment is applied to principal and shortens the term rather than reducing the instalment, unless the Borrower asks in writing for the instalment to be recalculated.
The Borrower grants the Lender a security interest over all of its present and after acquired property, registered on the Personal Property Securities Register within 20 business days of drawdown.
The furnace and its ancillary equipment described in Schedule 1 are registered separately by serial number as a purchase money security interest, so the Lender ranks ahead of an earlier general registration in respect of that plant.
Both directors of the Borrower guarantee repayment personally and unconditionally. Each guarantee is limited to the amount outstanding under this agreement plus enforcement costs, and each guarantor has certified that they received independent legal advice before signing.
The Lender releases every security interest and discharges the PPSR registrations within 20 business days of the loan being repaid in full.
The Borrower is in default if an instalment is more than 14 days late, if a promise in clause 7 is broken and not fixed within 20 business days of written notice, if the Borrower becomes insolvent or has a controller appointed, if a guarantor dies or becomes bankrupt and is not replaced within 60 days, or if the Borrower gave materially false information to obtain the loan.
Except where the Borrower is insolvent, the Lender gives written notice describing the default and allowing 20 business days to fix it before taking any enforcement step.
On an unremedied default the Lender may declare the whole balance immediately due, enforce the security, take possession of and sell the plant, and call on the guarantees. Sale proceeds are applied to enforcement costs, then default interest, then interest, then principal, and any surplus goes back to the Borrower.
The Borrower pays the reasonable costs of preparing this agreement and the security, registration fees, and any enforcement costs actually incurred.
The Borrower may not assign this agreement. The Lender may assign it on 20 business days notice to the Borrower, and the security passes with it.
Notices are in writing and sent by email to the addresses in Schedule 3, and are taken to be received when sent unless the sender receives a delivery failure message.
The laws of Tasmania apply and both parties submit to the courts of that state.
This agreement, its schedules, the security deed and the guarantees are the whole agreement between the parties. It may be signed in counterparts and by electronic signature.

Executed as an agreement. The Borrower confirms that it has read this agreement, that the loan is wholly for business purposes, and that it has had the opportunity to obtain independent legal and financial advice.

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Each director of the Borrower signs below as guarantor, gives the guarantee in clause 6.3, and confirms that they received independent legal advice about it before signing.

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Section by section

What each section is for, so you can keep the ones you need and drop the rest.

Key terms at a glance
Two stats rows carrying principal, rate, term, instalment, first and final payment dates, total repayable and total interest, before any clause is read.
1. Parties
Both companies with their ACNs and addresses, then a paragraph on what the foundry is buying and why the lender not being a licensed credit provider matters.
2. The loan
Amount and sole purpose, the declaration that the loan is wholly for business use, and a drawdown window closing on 30 September 2026.
3. Conditions before the money moves
Five numbered conditions: signed security ready to register, guarantees with advice certificates, insurance noting the lender, the supplier invoice, and recent financials.
4. Interest
8.50 percent calculated monthly in arrears, fixed for the term with no establishment or account fees, and default interest set 4 percent above without capitalising.
5. Repayment
Sixty direct debits on the first of the month, the order each payment is applied in, an extract of the first six instalments, and prepayment shortening the term.
Where the interest goes
An information panel comparing the first instalment with the sixtieth and showing what an extra $500 a month is worth over the life of the loan.
6. Security
A general security deed registered within 20 business days, a serial numbered purchase money registration over the furnace, two directors guarantees, and release within 20 business days of repayment.
7. What the borrower promises
Six covenants: insure the plant and keep it in Tasmania, grant no competing security, do not sell it, report twice a year, notify six listed changes, and keep tax and superannuation current.
8. Default
The events that count as default, the notice and cure period, what the lender may do once it is unremedied, the order proceeds are applied in, and who pays costs.
9. General
No assignment by the borrower, assignment by the lender on notice, email notices, Tasmanian law, and the documents that together form the whole agreement.
Schedules
The plant identified by make, model and serial number for the registration, the full 60 line repayment schedule, and the notice addresses including who receives a default notice.
Execution and guarantee
A signature block for each company, then a separate guarantee page where both directors sign and confirm they received independent legal advice.

What makes this document work

The arithmetic is printed rather than implied

Instalment one carries $1,275.00 of interest against $2,417.98 of principal, and the table runs six rows so the borrower can watch how slowly an early payment moves the balance. A panel underneath does the other half of the sum: an extra $500 a month clears the loan eight months early and saves roughly $6,200, which is the reason clause 5.3 has no early repayment fee in it.

The furnace is secured twice, on purpose

A general security deed covers everything the borrower owns now or later. Then the furnace itself is registered separately by serial number as a purchase money security interest, so on that one asset the lender sits ahead of any earlier all assets registration. Two registrations doing two different jobs, both with a deadline attached.

Enforcement has a speed limit

Unless the borrower is insolvent, the lender gives written notice describing the default and 20 business days to fix it before taking any step at all. If it does enforce, sale proceeds run in a stated order and any surplus goes back. Default interest is 4 percent above the rate and is not capitalised, so a late month cannot quietly compound.

Questions people ask

Does lending money to a business need a credit licence?

The National Credit Code applies where the debtor is an individual or a strata corporation and the credit is wholly or predominantly for personal, domestic or household purposes, or to buy or improve a residential investment property. A loan to a company purely for business use falls outside it. That is why clause 2.2 records the business purpose and why a separate business purpose declaration is signed on the same day.

What is a purchase money security interest?

A security interest taken to fund the purchase price of specific property. Registered on the PPSR within the time limit and flagged correctly, it carries a super priority: it goes to the front of the queue even against someone who registered earlier over all present and after acquired property. Tick the box wrongly and the whole registration is ineffective, so it is worth getting right.

Should company directors guarantee the company's loan?

Small company lending usually asks for it, but a guarantor can end up repaying the whole loan plus interest, and losing an asset put up as security. The standard advice is independent legal advice before signing. Clause 6.3 caps each guarantee at the outstanding balance plus enforcement costs, and each guarantor signs a certificate confirming they took that advice.

How late does a payment have to be before it is a default?

This agreement uses two thresholds. Seven days after the due date the amount starts attracting default interest. Fourteen days late is an event of default, which then triggers the 20 business day cure notice rather than immediate enforcement. Separating the two means a single missed direct debit does not put the whole facility at risk.

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