Friendly Loan Agreement Template (Kenya)

Lend money to friends, family or a business partner, with a clear repayment plan.

What it covers

• Loan amount, purpose and how it was sent
• Interest-free or simple interest
• Lump-sum or monthly instalment repayment
• Late payment and default
• Optional collateral and guarantor

What's inside

1. The Loan
2. Interest
3. Repayment
4. Instalments
5. Early Repayment
6. Late Payment
7. Default
8. Security
9. Guarantee
10. Private Arrangement
11. Dispute Resolution
12. General Provisions

Who it's for

• Friends and family lending money
• Business partners advancing funds
• Chama members lending to each other

Questions

Do I have to charge interest?

No. Switch the interest clause off for an interest-free loan.

Is an M-Pesa message enough proof?

It shows money was sent but not the terms. A signed agreement records the amount, repayment plan and what happens if payments stop.

What does a guarantor do?

A guarantor promises to repay the loan if the borrower does not. Under the Law of Contract Act a guarantee must be in writing and signed, so the guarantor signs this agreement too.

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