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Asset Based Loan Agreement for Hong Kong

Asset Based Loan Agreement Template for Hong Kong

A comprehensive lending agreement governed by Hong Kong law that facilitates secured financing where specific assets of the borrower serve as collateral. The agreement details the loan terms, security arrangements, monitoring requirements, and enforcement mechanisms while complying with Hong Kong's regulatory framework, including the Money Lenders Ordinance and Banking Ordinance. It establishes the rights and obligations of all parties involved, including specific provisions for valuation of security assets, maintenance of security margins, and enforcement procedures under Hong Kong law.

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Asset Based Loan Agreement

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What is a Asset Based Loan Agreement?

The Asset Based Loan Agreement is a crucial financing document used in Hong Kong when businesses seek to obtain funding secured against their assets, such as inventory, equipment, accounts receivable, or real estate. This agreement is particularly relevant in Hong Kong's dynamic business environment where companies require flexible financing solutions while providing security to lenders. The document incorporates specific requirements under Hong Kong law, including compliance with the Banking Ordinance, Money Lenders Ordinance, and various security registration requirements. It sets out comprehensive provisions for the loan facility, including drawdown mechanisms, security arrangements, monitoring requirements, and enforcement procedures, while addressing specific Hong Kong legal and regulatory considerations for secured lending.

What sections should be included in a Asset Based Loan Agreement?

1. Parties: Identifies and defines the Lender, Borrower, and any guarantors or security providers

2. Background: Sets out the context of the loan and the purpose for which it is being made

3. Definitions and Interpretation: Defines key terms used throughout the agreement and establishes interpretation rules

4. The Facility: Details of the loan amount, purpose, and drawdown conditions

5. Security: Description of assets provided as security and the nature of the security interest

6. Conditions Precedent: Conditions that must be satisfied before the loan becomes available

7. Representations and Warranties: Statements of fact and assurances given by the Borrower

8. Covenants: Positive and negative obligations of the Borrower during the loan term

9. Valuation and Monitoring: Provisions for periodic valuation of security assets and monitoring requirements

10. Interest and Fees: Interest rate, calculation method, fees, and payment terms

11. Repayment and Prepayment: Terms for loan repayment and any early repayment provisions

12. Events of Default: Circumstances constituting default and consequences

13. Enforcement: Lender's rights and remedies upon default

14. Miscellaneous: Standard boilerplate provisions including notices, amendments, and governing law

What sections are optional to include in a Asset Based Loan Agreement?

1. Guarantee: Required when there is a guarantor providing additional security for the loan

2. Insurance: Detailed insurance requirements when specific insurance coverage is required for the secured assets

3. Security Margin and Top-up: Include when the loan-to-value ratio needs to be maintained with provisions for margin calls

4. Syndication: Required when multiple lenders are involved or syndication is contemplated

5. Cross-Default: Include when the borrower has other significant financial obligations that could impact this facility

6. Tax Gross-up: Include when tax implications need to be addressed specifically

7. Assignment and Transfer: Include when either party may need to transfer their rights or obligations

8. Intercreditor Provisions: Required when there are multiple creditors with different security interests

What schedules should be included in a Asset Based Loan Agreement?

1. Asset Schedule: Detailed description and valuation of all assets provided as security

2. Conditions Precedent Documents: List of all required documents and conditions to be satisfied before drawdown

3. Drawdown Request Form: Standard form for requesting loan disbursements

4. Repayment Schedule: Detailed schedule of repayment dates and amounts

5. Financial Covenants: Specific financial ratios and requirements to be maintained

6. Security Documents: Forms of security documents and filing requirements

7. Fees Schedule: Detailed breakdown of all applicable fees and charges

8. Permitted Security Interests: List of pre-approved security interests that may exist over the assets

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

Hong Kong

Publisher

Ƶ

Document Type

Loan Agreement

Sector

Banking

Cost

Free to use
Relevant legal definitions






























































Clauses






































Relevant Industries

Manufacturing

Real Estate

Retail

Wholesale Trade

Logistics and Transportation

Industrial Production

Technology Hardware

Automotive

Agricultural

Mining and Resources

Construction

Warehousing

Import/Export

Equipment Leasing

Commercial Services

Relevant Teams

Legal

Finance

Treasury

Risk Management

Compliance

Credit

Operations

Corporate Finance

Commercial

Security Administration

Loan Administration

Asset Management

Relevant Roles

Chief Financial Officer

Finance Director

Treasury Manager

Legal Counsel

Commercial Director

Risk Manager

Credit Manager

Compliance Officer

Banking Relationship Manager

Loan Officer

Security Trustee

Corporate Finance Manager

Financial Controller

Asset Manager

Operations Director

Industries








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