A loan agreement is the definitive legal contract between a borrower and lender that sets out the loan amount, interest rate, repayment schedule, collateral, debt covenants, and default remedies. It's the document that governs the entire life of the loan, from funding through final repayment (or default). See the OCC's Comptroller's Handbook on Loan Portfolio Management for the regulatory framework banks use to structure and administer these agreements.
A loan agreement (also called a credit agreement or note agreement) is the binding contract that governs a commercial loan. It typically follows a term sheet or commitment letter — the lender's earlier, less formal statement of proposed terms — and becomes the controlling document once both parties sign and the loan closes. A typical loan agreement covers several categories of terms. Economic terms set the loan amount, interest rate (and whether it's fixed or variable), repayment schedule, and loan term (the total repayment period, e.g. a 10-year amortization). Security terms describe any collateral pledged and, for many small-business loans, a personal guarantee from the business owner. Covenant terms — the affirmative covenants (things the borrower must do, like deliver financial statements) and negative covenants (things the borrower can't do without consent) — give the lender ongoing visibility and control over the borrower's financial condition for the life of the loan. The agreement also spells out what happens when something goes wrong: default provisions define what counts as a default (payment or technical), the notice-of-default and cure-period process, the default interest rate step-up, and the lender's remedies (acceleration, collateral enforcement). Many commercial loan agreements also include a cross-default clause, pulling the borrower's other credit facilities into default too, and a material adverse change (MAC) clause giving the lender an out if the borrower's condition deteriorates significantly. Because the loan agreement is the controlling document for the entire relationship, borrowers negotiate its terms — covenant thresholds, cure periods, prepayment penalties — before signing, not after. Once signed, amending any term (a covenant waiver, a maturity extension) generally requires the lender's written consent.
A term sheet (or commitment letter) is the lender's earlier, non-binding or partially-binding summary of proposed terms, issued during underwriting. The loan agreement is the definitive, fully binding contract signed at closing — it's the document that actually governs the loan once funded.
Most cover: economic terms (amount, rate, repayment schedule, loan term), security terms (collateral, personal guarantee), covenants (affirmative and negative), representations made by the borrower, and default/remedies provisions (notice of default, cure periods, acceleration, cross-default).
Yes, but generally only with the lender's written consent — typically a formal amendment or a covenant waiver. Borrowers can't unilaterally change loan-agreement terms after closing, which is why negotiating covenant thresholds and cure periods before signing matters.
That's a technical default — a violation of a covenant or other non-payment obligation. Most loan agreements give the lender the same remedies for a technical default as for a missed payment, though lenders often waive isolated, easily-cured technical defaults rather than escalate.