Loan Agreement Lawyers Melbourne | Loan Contract Drafting and Review

Whether you are financing a business, lending to a shareholder or providing funds to a family member, a clear and legally sound loan agreement is the foundation for protecting both parties. Henton Legal has extensive experience drafting, reviewing and negotiating loan agreements for commercial, private and startup lending transactions in Melbourne.

What is a Loan Agreement?

A loan agreement is the legal document that records the terms on which one party lends money to another. It specifies the loan amount, interest rate, repayment schedule, security arrangements and what happens in the event of default. In Australia, regardless of the amount involved, a written loan agreement is the most important tool for protecting the lender\’s rights and ensuring there is no ambiguity about the parties\’ obligations. Without a properly documented agreement, any dispute will be difficult to resolve and the lender\’s position may be significantly weakened.

Our Loan Agreement Services

Commercial Loan Agreement

Business-to-business lending involves large amounts and complex terms that demand a rigorous legal document. We draft and review commercial loan agreements covering: loan amount and purpose restrictions; fixed and floating interest rates; repayment schedule and prepayment conditions; security and mortgage arrangements (including real property and personal property under the PPSA); financial covenants; and events of default and enforcement remedies. We ensure the agreement is both commercially fit for purpose and legally enforceable.

Shareholder Loan Agreement

Shareholder loans to a company are a common financing mechanism but can create tax and governance complications without proper documentation. A shareholder loan agreement we draft will clearly address: the nature of the advance (debt versus equity characterisation); interest rate and tax compliance; repayment priority and treatment in a liquidation; and notification and consent requirements for other shareholders. A well-structured arrangement protects the lending shareholder while preserving fair and transparent company governance.

Private Loan Agreement

Loans between family members or friends require the same legal formality as any commercial transaction. Many private lending disputes arise precisely because there was no written record of what was agreed. We provide concise but comprehensive private loan agreements covering loan amount, currency, interest arrangements, repayment schedule and default consequences.

Common example — parents lending to children for property purchase: Parents in Australia frequently provide funds to help a child purchase property. Without a properly documented loan agreement, there is a real risk that those funds will later be characterised as a gift — particularly in the event of a relationship breakdown, where a former partner may argue the funds form part of the shared asset pool. A professionally drafted loan agreement clearly establishes the legal nature of the advance as a loan, specifies repayment obligations and timeline, and can be reinforced by registering a caveat over the property to prevent disposal before the loan is repaid. We have extensive experience structuring and documenting these arrangements in a way that protects parents\’ financial interests while supporting their child\’s property purchase.

Convertible Loan Agreement

Convertible loans are commonly used in startup financing, allowing an initial debt investment to convert into equity at a future funding round. These agreements require careful drafting to balance investor protection and founder interests. Our convertible loan agreement service covers: conversion triggers and valuation discounts; valuation cap provisions; interest accrual and conversion calculations; and investor protection terms including anti-dilution and information rights.

Key Terms in a Loan Agreement

A well-drafted loan agreement addresses these essential elements, each of which must be tailored to the specific transaction:

Loan amount and drawdown conditions: The total amount, drawdown mechanism (lump sum or tranches), and any conditions precedent to disbursement.

Interest rate and fees: Rate type (fixed or floating), calculation method, payment frequency and any applicable fees or charges.

Repayment: Regular instalment schedule, balloon payment or on-demand arrangements, and the terms and costs of early repayment.

Security: Based on the risk profile of the transaction — personal guarantee, real property mortgage, PPSA security interest or other arrangements as appropriate.

Default and enforcement: Clear definition of events of default (late payment, breach of covenants, cross-default), enforcement rights and — where the borrower holds real property — the ability to lodge a caveat to protect the lender\’s position. A caveat prevents the borrower from selling, transferring or mortgaging the property without first satisfying the lender\’s claim. We are experienced in advising on when a caveat is appropriate, managing the lodgment process and, if necessary, defending or removing a caveat.

How We Work

Understanding your needs and risk assessment: We take the time to understand the lending relationship, the purpose of the loan and the commercial context, so we can assess the key risks and tailor our advice accordingly.

Drafting or reviewing the agreement: We draft a new agreement from scratch or conduct a thorough clause-by-clause review of an existing agreement, identifying problematic provisions and recommending changes.

Negotiation support: We represent your interests in negotiations with the other party, focusing on the terms that matter most while keeping the transaction moving forward.

Execution and follow-up: We ensure the agreement is properly executed and provide ongoing support — including agreement variations, default responses and caveat management — as needed.

Why Choose Henton Legal?

Lending law expertise: Our lawyers have strong practical experience across commercial lending, private finance and startup investment transactions, and a thorough understanding of Australian lending regulation and PPSA requirements.

Risk-first approach: We identify potential problems at the drafting stage rather than after a dispute arises. Every agreement we produce is designed to minimise your legal exposure.

Bilingual service: We provide legal services in English and Chinese, ensuring every client fully understands the terms and legal consequences of every document they sign.

Efficient and practical: Commercial lending is time-sensitive. We deliver high-quality documents without unnecessary delay, so legal process does not hold up your commercial plans.

Other Legal Services

Beyond loan agreements, we also advise on business setup and sale, commercial disputes, property conveyancing and share transfers. If you are looking for a trusted Melbourne lawyer, we are here to help.

The content on this page is provided by Henton Legal for general information purposes only and does not constitute legal advice. Please consult a qualified lawyer for advice specific to your circumstances.