Notes on loan contracts between companies and individuals:

Although borrowing funds between companies exists in large quantities in reality, its legality has not been recognized. In response to this, the Supreme People's Court held in the "Reply on How to Handle Issues When Borrowers in Enterprise Loan Contracts Do Not Return the Loans Overdue" that "the enterprise loan contract violates relevant financial regulations and is an invalid contract. In addition to the return of the principal, the interest should be Confiscated".

However, borrowing between companies and individuals is allowed. In the "Reply on How to Confirm the Effectiveness of Loans between Citizens and Enterprises", the Supreme People's Court confirmed that "citizens and non-financial enterprises (hereinafter) Loans between companies (referred to as "private loans") are private loans.

As long as the intentions of both parties are true, they can be deemed valid. Therefore, this article focuses on how to make and sign a loan between a company and an individual. Loan contract issues.

Extended information:

However, when borrowing money between a company and an individual, you cannot just be satisfied with issuing an IOU, but need to pay attention to more terms and conditions to avoid risks.

1. Interest?

First of all, if interest is charged on a loan, the interest rate standard should be stated in the contract. The interest rate standard shall not exceed four times the bank's similar loan interest rate, and the court will not protect the excess.

Secondly, interest cannot be incorporated into the principal to calculate compound interest, nor can interest be deducted from the principal in advance when borrowing.

If the interest rate standard is not stated in the contract and the lender and the borrower have a dispute, interest will generally be calculated based on the bank's similar loan interest rate. (However, if the loan between individuals does not state whether interest will be charged, it will be treated as an interest-free loan.)

2. Payment delivery?

Loans are generally paid directly in cash or Bank payment is delivered in two forms and needs to be stated in the contract. It is recommended to use a bank form of payment to retain proof of payment.

Small loans (less than 100,000) can be paid directly in cash, but the borrower should be required to issue a receipt, or it should be stated in the contract that upon signing the contract, the payment will be confirmed and no further receipt will be issued. strip.

In some loan cases, although the lender provides a loan contract, the borrower denies receipt of the loan, and both parties do not issue a receipt when delivering the loan, which creates the risk of being unable to recover the loan.

Similarly, in other loan cases, the lender provided a remittance certificate but did not sign a loan contract. The borrower claimed that the money was a gift rather than a loan, and the lender could not provide other evidence to prove it. It was a loan, but the loan was not recovered successfully in the end.

Reference: Baidu Encyclopedia - Approval on how to deal with overdue default of borrower in corporate loan contract