Document background
The Friends and Family Loan Agreement is designed for use in Hong Kong when individuals seek to formalize monetary lending arrangements with relatives or close acquaintances. This document becomes essential when personal loans exceed nominal amounts or when parties wish to ensure clear documentation of their lending arrangement. It provides a legal framework that protects both parties' interests while maintaining the informal nature of their relationship. The agreement includes essential elements required under Hong Kong law such as loan amount, interest rates (subject to the Interest Rate Ordinance), repayment terms, and default provisions. It differs from commercial loan agreements by typically offering more flexible terms and lower interest rates while still maintaining enforceability under Hong Kong's legal system. This document is particularly relevant in situations where traditional bank financing may not be suitable or accessible, such as small business startups, property deposits, or education funding.
