Loan Agreement Template Singapore: How to Draft a Personal or Business Loan Contract

Lending money to a friend, family member, or business partner? Or formalizing a director's loan to your company? A written loan agreement protects both borrower and lender. While verbal agreements are technically enforceable in Singapore, proving the terms in court without written documentation is extremely difficult.

This guide covers everything you need to include in a loan agreement, the legal requirements, and how to share sensitive financial documents securely.

Why You Need a Written Loan Agreement

Even for small personal loans, a written agreement prevents the most common disputes:

• "I thought it was a gift, not a loan"
• "We never agreed on an interest rate"
• "There was no deadline for repayment"

A written loan agreement establishes clear expectations and provides evidence if the relationship deteriorates.

Types of Loan Agreements in Singapore

Type	Common Use
Personal loan (between individuals)	Loans between friends, family members, colleagues
Business loan	Loans to/from a company
Director's loan	Loan from a director to the company (or vice versa)
IOU (I Owe You)	Simple acknowledgment of debt — less formal than a full agreement

Essential Terms to Include

Every loan agreement should contain these key elements:

1. Parties

Full legal names, NRIC/FIN numbers, and addresses of both borrower and lender.

2. Principal Amount

The exact amount being lent, stated clearly in both numbers and words.

3. Interest Rate

• For personal loans between individuals: no statutory cap, but courts may challenge usurious rates
• For licensed moneylenders: capped at 4% per month (effective October 2015 under the Moneylenders Act)
• If no interest is specified, the default is 0%

4. Repayment Schedule

• Lump sum on a specific date
• Monthly installments
• On demand

5. Late Payment Penalties

Specify any additional interest or fees for missed payments.

6. Collateral (if any)

Description of any security provided — property, vehicle, valuables.

7. Default Conditions

What constitutes a default and the lender's remedies upon default.

8. Governing Law

Singapore law (typically specified as "governed by the laws of the Republic of Singapore").

Stamp Duty on Loan Agreements

Loan agreements in Singapore are subject to stamp duty when the principal exceeds S$200:

Loan Amount	Stamp Duty Rate
Up to S$200	Exempt
Above S$200	0.05% of the loan amount

Stamp duty must be paid within 14 days of executing the agreement in Singapore (or 30 days if executed overseas). Unstamped agreements are not admissible as evidence in court.

Limitation Period

Under the Limitation Act, you have 6 years from the date the cause of action accrues (typically the date of default or the date repayment was due) to file a claim to recover the debt. After 6 years, the debt becomes time-barred.

Where to Resolve Disputes

Amount	Forum
Up to S$20,000	Small Claims Tribunal (or S$30,000 if both parties agree)
Above S$20,000	Magistrate's Court or District Court

The Small Claims Tribunal is designed to be accessible without a lawyer, making it practical for personal loan disputes.

Warning: Never Borrow from Unlicensed Moneylenders

Unlicensed moneylenders (Ah Long) are illegal in Singapore. Borrowing from them exposes you to:

• Exorbitant interest rates
• Harassment, intimidation, and violence
• Criminal liability (under the Moneylenders Act, both lending and borrowing from unlicensed sources can be an offence)

Always check the Registry of Moneylenders on the Ministry of Law (MinLaw) website to verify a lender's license.

How to Share Loan Documents Securely

Loan agreements contain sensitive personal and financial information — NRIC numbers, bank account details, income figures, and repayment schedules. Sending these via iMessage or email creates a permanent, insecure record.

LOCK.PUB lets you create a password-protected memo to share loan terms, repayment schedules, and financial details securely between borrower and lender. Set an expiration date so the information doesn't linger indefinitely.

Best Practices

1. Draft the agreement using a proper template
2. Share the draft via a password-protected memo on LOCK.PUB
3. Send the password separately through a different channel
4. Pay stamp duty within 14 days
5. Keep signed copies — both parties should retain originals

Loan Agreement Checklist

• Full names and identification numbers of both parties
• Principal amount (in numbers and words)
• Interest rate (or state "interest-free")
• Repayment schedule with specific dates
• Late payment penalties
• Collateral details (if applicable)
• Default conditions and remedies
• Governing law clause
• Signatures of both parties
• Witness signature (recommended)
• Stamp duty paid

Final Thoughts

A written loan agreement is not a sign of distrust — it is a sign of professionalism and mutual respect. Whether lending S$500 to a friend or S$50,000 to a business partner, putting the terms in writing protects everyone involved.

When sharing sensitive loan details, use a secure tool like LOCK.PUB to keep personal and financial information private.

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Need to share loan terms or financial documents securely? Create a password-protected memo on LOCK.PUB — it takes less than 30 seconds.