| name | loan-and-security-agreement |
| title | Loan and Security Agreement |
| description | Drafts a U.S. secured Loan and Security Agreement with UCC Article 9 security interests, perfection mechanics, covenants, and enforcement remedies. Use when documenting secured commercial loans, acquisition financing, working capital facilities, or equipment financing requiring perfected lien documentation. |
| author | CaseMark |
| author_url | https://github.com/CaseMark/skills/tree/main/skills/legal/loan-and-security-agreement |
| license | Apache-2.0 |
| version | 0.1.0 |
| execution_mode | open |
| jurisdiction | us |
| practice | finance |
| language | en |
Loan and Security Agreement
Drafts a fully enforceable secured Loan and Security Agreement establishing the lender's perfected security interest, borrower obligations, and enforcement rights for U.S. commercial lending transactions.
Prerequisites
Gather before drafting:
- Term sheet / commitment letter — principal, rate, maturity, fees, borrowing base
- Party documents — formation docs, good standing, board resolutions
- Collateral info — asset schedules, equipment lists (serial numbers), UCC lien searches, title reports
- Financial statements — audited/unaudited, used to set covenant levels
- Due diligence — disclosed litigation, existing liens, material contracts, environmental reports
- Subordination/intercreditor agreements — if junior or senior debt coexists
Quick Start
- Identify parties and collateral from term sheet
- Draft granting clause with UCC Art. 9 collateral descriptions
- Set loan economics (rate, repayment, default rate, prepayment)
- Build reps, covenants, and default provisions
- Define perfection steps and file UCC-1s
- Add governing law, remedies, and boilerplate
Agreement Sections
1. Parties and Recitals
For each party: exact legal name per formation docs, entity type, jurisdiction/date of formation, principal business address, registered agent, authorized signatories per board resolution.
Recitals state: business purpose of financing, existing relationship (if any), and consideration basis (security interest grant in exchange for loan).
2. Loan Terms
- Principal — numerals and words ("Five Million Dollars ($5,000,000.00)")
- Interest — fixed (state rate) or variable (index + spread, floor/ceiling, day count convention actual/360 or actual/365)
- Repayment — interest-only period, amortization schedule, balloon, maturity date
- Default rate — contract rate + 2–5%, subject to usury limits
- Late charge — typically 5% of overdue payment; confirm state law cap
- Prepayment — permitted/prohibited; if permitted: minimum amount, notice period, make-whole or premium formula
- Usury savings clause — auto-reduce charges exceeding maximum lawful rate
3. Security Interest and Collateral
Granting clause: Borrower grants lender a continuing first-priority security interest in all collateral, now owned or hereafter acquired.
