Company Loan Agreement (Ireland)

A Company Loan Agreement in Ireland sets the amount advanced, the interest, the repayment schedule, and the security or guarantee backing the debt, and is governed by the Consumer Credit Act 1995.

Company loan agreements in Ireland are governed by the general law of contract, the Companies Act 2014, and the Courts Act 1981. The Companies Act 2014 is particularly relevant in the context of security — Part 7 of the Companies Act 2014 (sections 408 to 434) governs the registration of charges over company assets with the Companies Registration Office (CRO), and charges that are not registered within 21 days of their creation are void against a liquidator and other creditors. The Companies Act 2014 also regulates the use of debentures (sections 435-439), the appointment and powers of receivers (Part 8, sections 437-440), and the duties of directors in relation to company borrowings.

The Courts Act 1981 is relevant to company loan agreements in the context of the statutory interest rate on judgment debts. Under section 22 of the Courts Act 1981, the current statutory interest rate on judgment debts in Ireland is 8% per annum. Where the parties have not agreed a contractual default interest rate, the lender may claim interest at this statutory rate from the date of default until the date of payment if proceedings are issued and judgment is obtained. For commercial transactions between companies, the European Communities (Late Payment in Commercial Transactions) Regulations 2012 (S.I. No. 580 of 2012) also apply, providing for a higher statutory interest rate on late payments: the ECB reference rate plus 8 percentage points. From 1 January 2026, this rate stands at 10.15% per annum (ECB rate of 2.15% plus 8%). The Regulations also entitle the creditor to a fixed minimum compensation of EUR 40 (debts up to EUR 1,000), EUR 70 (EUR 1,000–EUR 10,000), or EUR 100 (above EUR 10,000) for recovery costs, without the need to prove actual costs incurred.

The Land and Conveyancing Law Reform Act 2009 governs the creation and enforcement of mortgages and charges over land in Ireland and is directly relevant where a company is providing security over its real property. The Act sets out the powers of a mortgagee (lender holding a mortgage over land) on default — including the power of sale, the power to appoint a receiver, and the power to take possession. The 2009 Act replaced most of the Conveyancing Act 1881 for mortgages created after 1 December 2009, and introduced new procedural requirements for the enforcement of mortgages.

Bank lending to Irish companies is regulated by the Central Bank of Ireland under the Central Bank Acts 1942-2018 and the various European Regulations implementing the EU Capital Requirements Directive (CRD IV) and the Capital Requirements Regulation (CRR). Banks must comply with their own credit policies, risk management frameworks, and the Central Bank's codes of conduct when lending to commercial borrowers. For SME lending, the Code of Conduct for Business Lending to Small and Medium Enterprises (SME Code) issued by the Central Bank of Ireland requires banks to deal with SME borrowers in financial difficulty fairly, transparently, and with due consideration for the borrower's circumstances.

A solicitor experienced in corporate finance and banking law should be engaged to negotiate, draft, and review any significant company loan agreement in Ireland. The agreement should be carefully reviewed by the company's directors and by their advisers before it is executed, particularly with regard to the financial covenants, the events of default, the security package, and the enforcement provisions.

An Irish Company Loan Agreement is needed in any situation where a financial institution, another company, or other lender advances money to an Irish company on commercial terms. The most common situations in which a company loan agreement is required include the following.

Bank term loans: When an Irish company borrows a fixed sum from its bank for a specified term (for example, a five-year term loan to fund the acquisition of machinery or the purchase of commercial property), a formal company loan agreement is required. The bank's solicitors will typically prepare a standard form loan agreement, which the company's solicitors should review and negotiate on behalf of the borrower.

Revolving credit facilities: Where a company requires a flexible borrowing facility — for example, an overdraft or a revolving credit facility that allows the company to draw down, repay, and re-draw funds as needed — a company loan agreement (or facility agreement) governing the terms of the facility is required. Revolving credit facilities are commonly used by Irish companies to finance seasonal working capital requirements or to fund the payment of debts before customer invoices are collected.

Inter-company lending: Where an Irish holding company advances funds to a subsidiary (or one group company lends to another), a formal company loan agreement is required to document the transaction on arm's-length terms. Inter-company loans must comply with Irish transfer pricing rules (under Part 35A of the Taxes Consolidation Act 1997 for large companies, or under general arm's-length principles for all companies) and must be documented to reflect a market interest rate and commercial repayment terms.

Private debt investment: Where a private debt fund or other non-bank lender provides debt financing to an Irish company (for example, as part of a used buyout, a property acquisition, or a growth capital financing), a thorough company loan agreement is required. Private debt financing in Ireland has grown significantly as an alternative to traditional bank lending, and the loan agreements used by private debt funds are typically modelled on the Loan Market Association (LMA) standard forms, adapted for Irish law.

Acquisition finance: Where an Irish company is acquiring another business (whether by share purchase or asset purchase) and part of the purchase price is funded by borrowed money, an acquisition finance facility agreement is required. Acquisition finance loan agreements are complex documents that address the specific risks associated with acquisition lending — including the requirement for security over the target company's assets, the conditions to drawdown (including completion of the acquisition), and the financial covenant package.

Property finance: Where an Irish company is purchasing or developing commercial or residential property and is borrowing from a bank or other lender to fund the purchase or development, a company loan agreement (often in the form of a facility letter and mortgage) is required. Property lending in Ireland is subject to the Land and Conveyancing Law Reform Act 2009 and the various Central Bank macroprudential rules applicable to residential mortgage lending.

Under the Central Bank Act 1971 and Central Bank (Supervision and Enforcement) Act 2013, the Central Bank of Ireland regulates financial agreements. Section 149 of the Consumer Credit Act 1995 governs personal credit. Revenue Commissioners apply stamp duty under the Stamp Duties Consolidation Act 1999. The Data Protection Act 2018 and GDPR Article 6 apply to personal financial data. The High Court of Ireland adjudicates financial disputes.

A thorough Irish Company Loan Agreement should include the following key provisions to protect the lender, create enforceable obligations on the borrower, and comply with the Companies Act 2014 and applicable Irish law.

Parties: The agreement must identify the lender (by full legal name, address, and, if a regulated institution, its Central Bank authorisation number) and the borrower (by full registered name, CRO number, and registered office). Any guarantors should also be identified as parties (or as parties to a separate guarantee agreement).

Facility and purpose: The agreement must describe the facility — whether it is a term loan (a fixed amount advanced once), a revolving credit facility (a facility allowing multiple drawdowns up to a maximum amount), or a combination. The purpose of the loan (the use to which the proceeds must be applied) should be stated. A purpose clause enables the lender to monitor compliance and may allow the lender to accelerate the loan if the proceeds are misapplied.

Interest rate: The interest rate payable on the loan — fixed or floating (for example, EURIBOR plus a specified margin) — must be stated, together with the interest payment dates, the basis for calculation, and the default interest rate (the higher rate applicable after an event of default, typically 2-4% above the standard rate).

Repayment and amortisation: The repayment schedule must be clearly set out — whether the loan is repayable in a single bullet payment at maturity, in equal quarterly or annual instalments (amortisation), or in accordance with a cash sweep mechanism. The maturity date and any mandatory prepayment events (such as receipt of insurance proceeds, disposal of assets, or a change of control) should be specified.

Security package: The security to be provided by the borrower (and any guarantors) must be described in detail — fixed charges over land (with Land Registry particulars), floating charge over assets and undertaking, assignment of receivables, pledge of shares, and personal guarantees. The agreement should require the borrower to execute all security documents on or before completion of the loan and to register all registrable charges with the CRO within 21 days under Part 7 of the Companies Act 2014.

Conditions precedent to drawdown: Any conditions that must be satisfied before the loan is advanced — for example, execution and delivery of security documents, receipt of legal opinions, delivery of evidence of due authority (board minutes and resolutions), and satisfaction of the lender's credit conditions.

Representations and warranties: The borrower should give representations and warranties covering: valid existence and capacity; due authorisation of the loan; accuracy of financial statements; absence of material adverse change; no default under other agreements; compliance with all applicable laws; and validity and enforceability of security.

Financial covenants: The financial covenant package — DSCR, use ratio, interest cover, minimum liquidity, and capital expenditure limits — should be clearly specified, with testing dates, calculation methodology, and the financial statements against which compliance will be measured.

Events of default: The events of default — including payment default, breach of financial covenants, breach of representations or undertakings, insolvency, cross-default, and change of control — should be defined with precision. The cure periods (where applicable) and the acceleration mechanics should be specified.

Governing law and enforcement: The agreement should specify Irish law as the governing law and the courts of Ireland (High Court for disputes above EUR 75,000) as the exclusive jurisdiction for disputes. The borrower should submit to the jurisdiction of the Irish courts and irrevocably appoint a process agent in Ireland if the borrower is not incorporated in Ireland. The forms-legal.com Company Loan Agreement (Ireland) template covers the mandatory elements under Consumer Credit Act 1995.