Before drafting anything, check whether the lender needs a licence. Lending money in Singapore in the course of a moneylending business generally requires a licence, and an unlicensed moneylending contract is **unenforceable**. Excluded and exempt categories exist — loans to companies among them — but they are defined, not assumed.
Loan Agreement
Term loan between [LENDER] and [BORROWER]
Before drafting anything, check whether the lender needs a licence. Lending money in Singapore in the course of a moneylending business generally requires a licence, and an unlicensed moneylending contract is unenforceable. Excluded and exempt categories exist — loans to companies among them — but they are defined, not assumed.
| Item | Detail |
|---|---|
| Lender | [NAME], [UEN / NRIC] [NUMBER] |
| Borrower | [NAME], [UEN / NRIC] [NUMBER] |
| Is the lender licensed or exempt? | [State the basis — see Section 1] |
| Principal | S$ [AMOUNT] |
| Purpose | [DESCRIBE] |
| Interest | [RATE] per cent per annum, [fixed / floating] |
| Repayment | [Bullet on maturity / Equal monthly instalments / Interest only then bullet] |
| Drawdown date | [DATE] Maturity: [DATE] |
| Security | [None / Charge over ______ / Personal guarantee by ______] |
| Charge registration due | [DATE] — where a registrable charge is created |
| Governing law | Singapore |
1. Licensing — Check First
1.1A person who carries on the business of moneylending in Singapore generally requires a licence under the Moneylenders Act. A contract made by an unlicensed moneylender is unenforceable, and the lender may commit an offence.
| Situation | Position | Note |
|---|---|---|
| Bank or licensed finance company lending | Regulated separately | Outside the moneylending regime |
| Loan to a company | Generally excluded | A common and legitimate basis — confirm the current scope |
| Loan by a company to its own employee | [Confirm] | Check the specific exclusion and any director-loan restrictions |
| Shareholder or director lending to their own company | [Generally excluded] | Confirm; document it properly regardless |
| One-off loan between individuals, no business of lending | [Depends] | Carrying on a business of moneylending is the test — a genuine one-off differs from a pattern |
| Lending to individuals at interest, repeatedly | Licence likely required | This is the core of the regime |
| Intercompany loan within a group | [Generally excluded] | Confirm; consider transfer pricing and withholding tax |
| Convertible loan to a startup | [Depends on the parties] | To a company, generally outside; take advice |
2. The Loan
7 more pages in the Word file
This is page 1 of the Word document, exactly as it appears when you open it. Fields shown like THIS are placeholders for you to complete.
These notes accompany the template and explain the drafting choices, the compliance points and the mistakes most often made with this document. They appear as a final page in the Word file, intended to be deleted before the document is executed.
A contract made by an unlicensed moneylender is unenforceable, which means the lender may be unable to recover the money at all. Loans to companies are generally excluded, and there are other excluded and exempt categories, but they are defined rather than assumed. Confirm the basis and record it — check 1 of the annexure is first for a reason.
The regime targets carrying on the business of moneylending. A single loan between friends is a different thing from repeated lending at interest to individuals. Where the pattern is unclear, take advice rather than relying on the transaction feeling informal.
A registrable charge not lodged within the prescribed period is void against the liquidator and creditors. The debt survives; the security does not. Lenders usually handle the filing and borrowers usually assume so — which is why check 12 requires the responsibility to be agreed in writing and confirmed afterwards.
Before granting security, check whether existing facilities prohibit it. Granting a new charge in breach triggers default under the existing facility, and cross-default provisions cascade. Equally, the negative pledge in Clause 6.2(c) is what protects this lender from being subordinated later.
A default rate must be a genuine pre-estimate of loss or otherwise commercially justifiable. A punitive uplift risks being struck down as a penalty, leaving the lender with nothing beyond ordinary interest. Two to four per cent above the contract rate is defensible; doubling it is not.
Interest paid to a non-resident lender is a common withholding trigger. Clause 4.5 requires the gross-up position to be settled. Silence means the lender discovers it on the first payment, and a gross-up obligation agreed late is materially more expensive than one priced in.
A guarantee, particularly a personal one from a director or spouse, is far more robust where the guarantor took independent legal advice and that is evidenced. Without it, arguments about undue influence and non-disclosure become available, and they succeed more often than lenders expect.
The Companies Act restricts loans and quasi-loans to directors and connected persons, with exceptions. Owner-managed companies frequently run director current accounts without appreciating this. Where the lender or borrower is connected to a director, check 9 and the interest declaration in check 8 both apply.
Directors who allow a company to borrow when they know or ought to know it cannot repay face personal exposure. The cash flow projection in check 7 should be prepared and retained with the board resolution, not produced afterwards.
Late accounts are a technical default that can trigger cross-default across every other facility and permit repricing. Diarise the delivery dates alongside the covenant tests, and treat a missed deadline as a real event rather than an administrative slip.
Advancing funds before the security is executed and the resolutions passed is common and is how lenders end up unsecured. Where a condition is genuinely waived, do it in writing and understand what is being given up.
Clause 5.4 applies payments to costs and interest before principal. On a distressed loan this determines how quickly the principal reduces, and borrowers frequently assume the opposite order.
An undischarged charge on the public record after repayment obstructs the borrower’s future borrowing and appears in every diligence exercise. Clause 8.4 obliges the lender to lodge the memorandum of satisfaction — borrowers should chase it.
Certain security instruments attract stamp duty, and an unstamped instrument is inadmissible in evidence. Check the position before execution rather than at enforcement, when it is too late to matter cheaply.
Reflects Singapore law current as of {{DATE OF USE}}. The Moneylenders Act and its exclusions and exemptions, charge registration periods under the Companies Act 1967, restrictions on loans to directors, withholding tax rates and stamp duty on security documents all change — take legal advice before lending or borrowing any material amount, and specifically on the licensing question.
This is a ready-to-use template provided for convenience. Laws and requirements change, and every situation is different — please have it reviewed by a qualified professional (a lawyer, corporate secretary, or accountant as relevant) before you rely on it.