I. Definition of loan contract
A loan contract refers to an agreement that a financial institution, as a lender, accepts the borrower's application, provides loans to the borrower, and the borrower repays the loan principal and pays the loan interest at maturity.
II. Purpose of the loan contract
1. The borrower shall use the loan for the agreed purpose and shall not use it for illegal purposes. The purpose of the loan agreed in the loan contract shall not violate the provisions of the state on restricting operation, franchising and prohibiting operation by laws and administrative regulations.
2. Clarifying this clause can protect the borrower's right to use funds; For lenders, it can monitor the flow of funds, ensure the return of funds and control risks.
Three, the loan contract to limit the use of loans.
1. First of all, prohibitive norms will invalidate the loan contract. Even if the lender is not aware of this illegal use when using the loan, once the lender knows this illegal use, it must stop the borrower from continuing to withdraw money.
2. Secondly, restricting the use of loans is to ensure the source of repayment funds. If the loan is not used according to the agreed purpose, the borrower may lose the repayment ability due to improper operation.
3. Furthermore, the internal operating policies of lending banks may have restrictions on the industries or departments that issue loans, and government regulations and decrees sometimes have similar provisions.
4. Finally, restricting the use of loans may also be because it involves the interests of third parties. For example, in export credit projects, the use of loans is limited to specific payment targets.