Bridging Loan Agreement (Malaysia)
Bridging Loan Agreement
BRIDGING LOAN AGREEMENT
This Bridging Loan Agreement ("Agreement") is made on [Agreement Date] between:
(1) [Lender Name] (SSM/Licence No. [Lender S S M]), having its principal place of business at [Lender Address] ("Lender"); and
(2) [Borrower Name] (NRIC/SSM No. [Borrower I C]), of [Borrower Address] ("Borrower").
1. Bridging Loan Facility
1.1 Subject to the terms and conditions of this Agreement, the Lender agrees to provide the Borrower with a bridging loan facility of [Loan Amount] ("Loan").
1.2 The Loan shall be used solely for the following purpose: [Loan Purpose].
1.3 The Loan shall be drawn down on [Drawdown Date] by way of a single drawdown, subject to the Lender being satisfied that all conditions precedent have been fulfilled.
1.4 Conditions Precedent to Drawdown: (a) execution of this Agreement and all security documents; (b) delivery of satisfactory title search and valuation report; (c) evidence of any required insurance; and (d) such other conditions as the Lender may reasonably require.
2. Interest and Repayment
2.1 The Borrower shall pay interest on the outstanding balance of the Loan at [Interest Rate] per annum, computed on a daily basis on a 365-day year.
2.2 Interest shall be payable on a [Interest Payment] basis during the loan tenure.
2.3 The Loan tenure is [Loan Tenure]. The Borrower shall repay the outstanding Principal (and all accrued interest, if rolled up) in full no later than [Repayment Date] ("Final Repayment Date").
2.4 The Borrower undertakes to apply the proceeds of the exit event described in Clause 1.2 towards repayment of the Loan immediately upon receipt of such proceeds.
2.5 The Borrower may prepay the Loan in whole at any time, subject to giving the Lender not less than five (5) Business Days' prior written notice.
3. Security
3.1 As security for the due performance of all the Borrower's obligations under this Agreement, the Borrower shall provide the following security: [Security Type] over [Security Property].
3.2 The Borrower shall execute all security documents, including (where applicable) a Form 16A Charge under the National Land Code 1965 (Act 56) and/or a Debenture over the company's assets, in favour of the Lender within seven (7) days of the date of this Agreement.
3.3 The security shall be registered promptly with the relevant State Land Registry and/or the SSM (for a Debenture) at the Borrower's cost and expense.
3.4 Personal Guarantee: [Guarantor Name] has separately executed a personal guarantee in favour of the Lender as additional security for the Borrower's obligations under this Agreement (where applicable).
4. Default and Remedies
4.1 Events of Default include: (a) failure by the Borrower to pay any amount within seven (7) Business Days of the due date; (b) the exit event fails to complete within the loan tenure; (c) the Borrower becomes insolvent or is wound up; (d) any security document is challenged or becomes unenforceable; or (e) any material representation is found to be false.
4.2 Upon an Event of Default, the Lender may: (a) declare the full outstanding Loan, interest, and all costs immediately due and payable; (b) exercise its power of sale under the security documents and, for land charges, apply to the High Court for an order for sale under Section 256 of the National Land Code 1965 (Act 56); and/or (c) appoint a Receiver under any Debenture.
4.3 Default interest shall accrue on any overdue amounts at [Interest Rate] per annum plus 2% per annum from the due date until actual payment.
5. General
5.1 Stamp Duty. This Agreement is subject to stamp duty under Item 27 of the First Schedule to the Stamp Act 1949 (Act 378). The Borrower shall bear the stamp duty costs.
5.2 Governing Law. This Agreement is governed by the laws of Malaysia. Any dispute shall be submitted to the exclusive jurisdiction of the Courts of Malaysia.
5.3 Entire Agreement. This Agreement constitutes the entire agreement between the parties in relation to the Loan and supersedes all prior representations and negotiations.
Signatures
IN WITNESS WHEREOF, the parties have executed this Bridging Loan Agreement on the date first above written.
Authorised Signatory
________________
Signature
Borrower / Director
________________
Signature
Guarantor (if applicable)
________________
Signature
What Is a Bridging Loan Agreement (Malaysia)?
A Bridging Loan Agreement in Malaysia records the amount lent, interest, repayment schedule, and default terms agreed by the parties.
The Bridging Loan Agreement is governed by the Contracts Act 1950 (Act 136) as the primary contractual framework. For property bridging loans — the most common type in Malaysia — the security is typically a charge over land registered under the National Land Code 1965 (Act 56), created by Form 16A (Charge) filed with the relevant State Land Registry. The Financial Services Act 2013 (Act 758) governs bridging loans extended by licensed banks, finance companies, and development finance institutions. Bridging loans extended by non-bank private lenders must comply with the Moneylenders Act 1951 (Act 400) if the lender is a licensed moneylender, or the Contracts Act 1950 if the lender is a private company or individual lending in a non-regulated capacity.
In Malaysian property development, bridging finance is used extensively by property developers to fund construction before End-Financing proceeds from purchasers flow in. Bank Negara Malaysia's End-Financing Guidelines regulate how banks provide end-financing to house buyers, and the housing developer's bridging loan facility from a separate bank (the Developer's Finance / DF facility) is governed by the Housing Development (Control and Licensing) Act 1966 (Act 118) and the Housing Development (Control and Licensing) Regulations 1989.
For corporate bridging loans — used to bridge a gap between signing and completion of a merger, acquisition, or equity round — the structure is similar to a short-term term loan, with security potentially including a Debenture (fixed and floating charge), personal guarantees, and shares pledged under a Securities Pledge Agreement. The Stamp Act 1949 (Act 378) imposes stamp duty at Item 27 of the First Schedule at RM5 per RM1,000 of the loan amount.
The legal framework governing the Bridging Loan Agreement (Malaysia) in Malaysia draws on several key statutes and regulatory bodies. Under Malaysian law, the Contracts Act 1950 (Act 136) governs contractual obligations. The Companies Act 2016 (Act 777) regulates corporate entities through the Companies Commission of Malaysia (SSM). The Employment Act 1955 (Act 265) and the Department of Labour govern employment matters. The Personal Data Protection Act 2010 (Act 709) and the Personal Data Protection Department protect personal data. The Inland Revenue Board of Malaysia (LHDN) administers tax obligations. The Industrial Court adjudicates employment disputes under the Industrial Relations Act 1967 (Act 177). Parties executing a Bridging Loan Agreement (Malaysia) in Malaysia should confirm the document reflects current law, including any amendments enacted since the original drafting date. The Financial Services Act 2013 (Act 758) sets the foundational requirements.
When Do You Need a Bridging Loan Agreement (Malaysia)?
A Bridging Loan Agreement in Malaysia is used whenever short-term financing is required to bridge a known funding gap with a defined repayment exit.
A Bridging Loan Agreement is needed when a Malaysian property buyer purchases a new property before completing the sale of their existing property — the bridging loan funds the deposit or purchase price of the new property, to be repaid from the proceeds of the existing property sale.
A Bridging Loan Agreement is required when a Malaysian property developer needs to fund initial construction works before the first tranche of End-Financing loans from buyers' banks is received under the Housing Development (Control and Licensing) Act 1966 (Act 118) — the developer's bridging loan (DF facility) from a bank bridges the early construction financing gap.
A Bridging Loan Agreement is needed when a company completing a merger or acquisition requires short-term financing to pay the initial purchase price at completion, pending the longer-term refinancing or bond issuance that will permanently fund the acquisition.
A Bridging Loan Agreement is required when a Malaysian SME or startup needs short-term capital to fund operations while a venture capital or private equity round is being completed — the bridging loan converts to equity or is repaid from round proceeds on closing.
A Bridging Loan Agreement is needed when a Malaysian company refinancing existing bank debt requires a bridging facility from a second bank to repay the first bank while the new long-term facility documentation is being completed, avoiding an event of default under the existing facility.
A Bridging Loan Agreement is used when a Malaysian property investor purchases a commercial property at auction requiring immediate payment, funded by a bridging loan from a private lender or licensed moneylender under the Moneylenders Act 1951 (Act 400), pending the drawdown of a conventional term loan from a bank.
What to Include in Your Bridging Loan Agreement (Malaysia)
A Malaysia Bridging Loan Agreement must include the following essential components.
Parties: Identify the lender with full legal name (and bank licence details if a licensed institution) and the borrower with SSM registration number (for companies) or NRIC (for individuals).
Loan Amount: State the principal amount in Malaysian Ringgit (RM) and, if the loan is to be drawn in tranches, the drawdown schedule and conditions for each tranche.
Loan Tenure: State the tenor — typically 3 to 24 months. Bridging loans are short-term by definition. Include provisions for extension of the tenure if the exit event is delayed.
Interest Rate: State the interest rate — typically higher than conventional loans. For regulated lenders, interest rates must comply with Bank Negara Malaysia guidelines or the Moneylenders Act 1951 (Act 400). State whether interest is payable monthly or rolled up to be repaid at maturity with principal.
Exit (Repayment Source): Clearly identify the anticipated repayment source — sale of specified property, completion of a specified equity round, drawdown of long-term facility — and include conditions requiring the borrower to apply those proceeds to repay the bridging loan.
Security: Describe the security provided — property charge under the National Land Code 1965 (Act 56), Debenture, personal guarantee, or pledge of shares. For land charges, state the land title reference, mukim, and state.
Drawdown Conditions: List the conditions precedent to drawdown — execution of security documents, evidence of valuation, title search showing clear title, and any regulatory approvals.
Default and Enforcement: Define events of default (non-payment, breach of covenant, insolvency) and the lender's remedies — power of sale of charged property, appointment of receiver, or demand for immediate repayment.
Stamp Duty: Acknowledge duty at Item 27 of the First Schedule to the Stamp Act 1949 (Act 378).
Additional compliance elements for a Bridging Loan Agreement (Malaysia) used in Malaysia include: Under Malaysian law, the Contracts Act 1950 (Act 136) governs contractual obligations. The Companies Act 2016 (Act 777) regulates corporate entities through the Companies Commission of Malaysia (SSM). The Employment Act 1955 (Act 265) and the Department of Labour govern employment matters. The Personal Data Protection Act 2010 (Act 709) and the Personal Data Protection Department protect personal data. The Inland Revenue Board of Malaysia (LHDN) administers tax obligations. The Industrial Court adjudicates employment disputes under the Industrial Relations Act 1967 (Act 177). Forms-legal.com provides this template as a starting point for Malaysia-compliant documentation.
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Forms Legal. (2026). Bridging Loan Agreement (Malaysia) (Malaysia) [Legal document template]. Forms Legal. https://forms-legal.com/malaysia/financial/loans/bridging-loan-agreement-malaysia
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note = {Free legal document template. Based on Financial Services Act 2013 (Act 758)}
}Frequently Asked Questions
Bridging loan interest rates in Malaysia vary significantly depending on the lender type, the borrower's creditworthiness, the quality of the security, and the loan tenure. Licensed commercial banks and Islamic banks typically charge between 5.5% and 8% per annum for property bridging loans to creditworthy borrowers, benchmarked against Bank Negara Malaysia's Overnight Policy Rate (OPR), which was 3.00% as of 2025. Licensed development finance institutions such as Bank Pembangunan Malaysia Berhad or SME Bank may offer slightly lower rates for qualifying projects. Private credit funds and licensed moneylenders under the Moneylenders Act 1951 (Act 400) may charge between 12% and 24% per annum for higher-risk bridging loans. The Moneylenders Act 1951 caps interest rates for licensed moneylenders at 12% per annum for secured loans and 18% per annum for unsecured loans. Borrowers should compare the total cost — including arrangement fees, legal fees, and early repayment penalties — when evaluating bridging finance offers.
Bridging loans in Malaysia are almost always secured, given their short-term and higher-risk nature. For property bridging loans, the standard security is a registered charge over the real property under the National Land Code 1965 (Act 56), created by Form 16A filed with the relevant State Land Registry. The charge gives the lender a right to sell the property through a court order for sale under Section 256 of the National Land Code 1965 if the borrower defaults. Additional security commonly taken includes: personal guarantees from the company's directors under the Contracts Act 1950 (Act 136); a Debenture (fixed and floating charge) over the company's assets; and insurance assignments. For corporate bridging loans, the security package may also include a Securities Pledge Agreement over shares in subsidiaries. Lenders typically require an independent valuation report from a registered valuer (BOVAEA-registered) confirming the security property's market value before drawdown.
A private company (Sdn Bhd) can provide a bridging loan in Malaysia without a banking or money lending licence, provided the lending is not carried out as a business of money lending. The Moneylenders Act 1951 (Act 400) applies to persons who carry on the business of money lending — defined as making a practice of lending money — and requires such persons to obtain a moneylender's licence. A private company that makes an occasional inter-company loan or a one-off private bridging loan as part of a commercial transaction generally does not require a moneylender's licence, provided money lending is not the company's primary business activity. However, a private company that regularly makes loans to the public for profit may be considered to be carrying on a moneylending business and must be licensed. In practice, most private bridging loans in Malaysia are between related parties (within a corporate group) or between sophisticated commercial parties, avoiding the moneylending licensing requirement.
If the anticipated repayment event — such as a property sale, refinancing completion, or equity round closing — does not occur before the bridging loan matures, the borrower faces a maturity default. In this situation, the options typically include: (1) extension of the bridging loan tenure by agreement with the lender, usually at a higher interest rate or with additional security; (2) refinancing the bridging loan with a new term loan from the same or a different lender; or (3) enforcement by the lender if no agreement is reached. If the lender enforces against secured property, the enforcement procedure in Malaysia depends on the security type — for a registered land charge under the National Land Code 1965 (Act 56), the lender must apply to the High Court for an order for sale under Section 256 of the National Land Code 1965, which can take 12 to 24 months. For corporate security (Debenture), the lender may appoint a Receiver and Manager under the Debenture terms.
A bridging loan and an overdraft are both short-term financing instruments in Malaysia, but they differ in structure and purpose. A bridging loan is a fixed-amount term loan with a defined repayment date and a specific repayment source — it is drawn down in full (or in tranches) at the start and repaid at a known future point. A bank overdraft is a revolving credit facility that allows a company to withdraw up to an agreed limit from its current account at any time, with fluctuating drawdowns and repayments. Overdrafts are governed by the bank's standard facility terms and are repayable on demand. Bridging loans are typically secured by specific assets (property charges or debentures), whereas overdrafts may be secured by a floating charge over the company's assets or by personal guarantees. For property bridging purposes, a bridging loan is the standard instrument — an overdraft is generally used for working capital rather than for funding a specific asset acquisition or gap financing.
This template is provided for informational purposes only and does not constitute legal advice. Laws vary by jurisdiction and change over time. Consult a qualified attorney for advice specific to your situation.Full disclaimer
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