Loan Agreement Template

Community Development Revolving Loan Fund
Loan Agreement - 2018
THIS LOAN AGREEMENT, effective [Loan Effective Date], is made by and between
[Credit Union Name], [Credit Union Street Address], [City], [State] [Zip-Code]
(Borrower) and the National Credit Union Administration, an independent federal
regulatory agency, 1775 Duke Street, Alexandria, Virginia 22314, as administrator for the
Community Development Revolving Loan Fund (NCUA).
WITNESSETH:
WHEREAS, Borrower is a credit union primarily engaged in providing services to
members with low income and qualifies for low-income designation, within the meaning
of NCUA’s regulations governing low-income designation (12 CFR §701.34);
WHEREAS, Borrower has requested financial assistance from the Fund in the form of a
loan and the purpose of such loan is to provide basic financial and related services to
residents in Borrower’s community, enhance Borrower’s capacity to better serve its
members and the community in which Borrower operates, and/or respond to an
emergency;
WHEREAS, NCUA has reviewed the application and has determined to provide
financial assistance to Borrower in the form of a loan from the Fund; and
WHEREAS, Borrower wishes to borrow and NCUA wishes to lend, in accordance with
the terms and conditions in this Loan Agreement.
NOW, THEREFORE, in consideration of the mutual promises, and other good and
valuable consideration, the receipt and sufficiency of which they acknowledge, Borrower
and NCUA, each intending to be bound, agree as follows:
1. Promissory Note:
Contemporaneous with the execution of this Loan Agreement, Borrower has
executed a Promissory Note evidencing its indebtedness to NCUA and reflecting its
obligation to repay the indebtedness in accordance with its terms. In this Loan
Agreement, the indebtedness evidenced by Borrower’s Promissory Note is referred
to as the “Loan.”
2. Recording the Loan as a Nonmember Share Account (____ Check here if loan
to be recorded nonmember share; otherwise, loan shall be recorded as a note

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payable):
NCUA will place all of the Loan proceeds into a Nonmember Deposit Account
maintained with Borrower, and Borrower agrees to open an account on its books
reflecting the amount of funds placed on deposit, using its standard opening
procedures and disclosures, including issuance of any share certificates typically
used by the Borrower to reflect and acknowledge its obligation to the account
holder. Any funds placed with Borrower in the form of a share account will not
earn dividends. Borrower must make payments of accrued interest directly to
NCUA in accordance with the repayment schedule in the Promissory Note.
Borrower agrees to reduce the principal balance of the share account as carried on
its books to correspond with repayments of principal made by Borrower under the
Promissory Note.
3. Representations and Warranties:
Borrower represents and warrants to NCUA that:
a. If a state-chartered credit union, it is duly organized and existing in good
standing under the laws of the jurisdiction of its incorporation or
organization; has obtained and is qualified to retain a designation from
NCUA as to its low-income status, as set forth in 12 CFR §701.34; is duly
qualified to do business and is in good standing in every jurisdiction where
the nature or extent of its business as a foreign corporation or other entity;
has obtained all licenses and permits and has filed all registrations necessary
for the lawful operation of its business; and has the corporate power and
authority to own its properties and carry on its business as now being
conducted.
b. The Promissory Note and this Loan Agreement have been properly
authorized by all requisite corporate actions of Borrower and have been duly
executed and delivered on behalf of Borrower as evidenced by the credit
union’s board resolution reflecting board action authorizing the signing of
this Loan Agreement.
c. No consent of any other person and no consent, permit, license, approval or
authorization of, or registration, declaration or filing with or notice to any
governmental authority is required in connection with the execution,
delivery, or performance by Borrower, or the validity or enforceability
against Borrower, of the Promissory Note and this Loan Agreement.
d. Neither the Promissory Note, this Loan Agreement, nor the performance of
Borrower’s obligation violates any provision of any law, rule, or regulation
or of any order, judgment, award or decree of any governmental authority,
the charter documents of Borrower, or any security issued by Borrower or

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any agreement, indenture, or undertaking to which Borrower is a party or by
which Borrower’s property is bound, affected, or would constitute a default.
e. The Promissory Note and this Loan Agreement collectively constitute the
legal obligation of Borrower, enforceable against Borrower in accordance
with their respective terms, except to the extent that their enforceability
against Borrower may be limited by NCUA, bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium, or similar laws affecting
the enforceability of creditors’ rights generally or by equitable principles of
general application.
f. To the best of the Borrower’s knowledge, there is no pending or threatening
action, suit, investigation, or proceeding affecting Borrower by or before any
governmental authority which, if adversely determined, would have a
materially adverse effect on Borrower’s ability to perform its obligation
hereunder. Borrower is not in default under any applicable statute, rule
order, decree, or regulation of any governmental authority.
g. Borrower is not in default in any respect concerning the payment or
performance of any obligation for monies borrowed or under any mortgage,
indenture, lease, contract, or other agreement or undertaking to which
Borrower is a party or by which Borrower may be bound or affected and no
Event of Default or Default has occurred and is continuing; Borrower is not
in default under any order, award or decree of any governmental authority
binding upon or affecting Borrower or by which Borrower may be bound or
affected, and no such order, award, or decree would adversely affect the
ability of Borrower to carry on its business as currently conducted.
h. Borrower will pay, when due, all principal, interest and other charges and
liabilities in accordance with the provisions of the Promissory Note.
i. Without the prior written consent of NCUA, Borrower will not take or
permit to be taken any action that might hinder, obstruct or delay NCUA in
the exercise of any remedy NCUA has under this Loan Agreement.
Borrower agrees to maintain in good standing its corporate existence and its
right to transact business, and agrees to obtain and maintain all licenses,
permits, and registrations necessary for the conduct of its business.
j. In accordance with Part 705 of NCUA’s regulations, the Borrower has
requested financial assistance from the Fund in the form of a loan for the
following specific purpose(s): [Purpose/use of funds for the Credit Union]

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4. Reporting and Recordkeeping:
a. Borrower will provide a report to NCUA at the time of, and together with,
each periodic payment due under the Promissory Note, addressing the
following topics:
i.
ii.

iii.

the use of Loan proceeds, including how successful Borrower has
been in implementing any new programs and initiatives;
the impact such programs have had on the membership and the
community served by Borrower, including how such impact is
measured; and
any obstacles encountered that affect Borrower’s ability to
accomplish the objectives identified in its Loan application, and what
plans Borrower has to overcome the obstacles.

b. Upon NCUA’s request, Borrower will promptly deliver to NCUA such other
information about the business, operations, revenues, financial condition,
property, or business prospects of Borrower as NCUA may, from time to
time, reasonably request to permit NCUA to maintain or perfect its security
interest in any collateral and to fully effectuate the purpose of this Loan
Agreement.
c. Borrower will, promptly upon obtaining knowledge or notice thereof, give
notice to NCUA of any of the following:
i.
ii.
iii.
iv.

a breach of any of the covenants in the Loan Agreement;
an Event of Default or a Default;
a default under any other agreement for borrowed money; or
casualty to any collateral or any other force majeure, or any
litigation, investigation or other proceeding against or involving
Borrower.

5. Matching Funds (____ Check here if required):
In accordance with Part 705 of NCUA’s regulations, the Borrower agrees to
increase its share deposits in an amount equal to the Loan amount within one year of
the approval of the Loan application and maintain the increase in the total amount of
share deposits for the duration of the Loan.
a. Borrower’s failure to generate the required matching funds within one year
of the approval of the Loan will result in the reduction of the Loan
proportionate to the amount of the match actually generated. Payment of
any additional funds initially approved will be limited as appropriate to
reflect the revised amount of the Loan approved and any funds already
advanced to Borrower in excess of the revised amount of the Loan must be

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repaid immediately to NCUA. Failure to repay such funds to NCUA upon
demand will result in the default of the entire Loan.
b. Borrower may increase member share deposits, which will be credited as a
two to one match, and/or nonmember deposits. Matching funds must be
nongovernmental funds. If Borrower increases nonmember share accounts
to generate the required matching funds, such nonmember accounts are not
subject to the limitations contained in 12CFR §701.32. Borrower
understands that, upon termination of the Loan, the nonmember share
account deposits accepted to meet matching requirement are subject to 12
CFR §701.32.
6. Security Agreement (_____Check here if required):
The Borrower will complete, sign, and return the Security Agreement (attached).
NCUA requires a perfected lien on the credit union’s assets of at least 110 percent
of the outstanding loan amount. NCUA shall, at any time, require additional
collateralization to maintain the net value of collateralized assets at 110 percent of
the outstanding loan balances or require the credit union to immediately reduce the
outstanding loan balance plus accrued interest to the fair market value of the
collateral securitizing the loan. Failure to maintain a 110 percent collateralization
level is considered a default under the terms of the promissory note and the full
outstanding loan balance plus accrued interest will be immediately due and payable.
7. Examination by NCUA (____ Check here if required):
In accordance with §705.7 of NCUA’s regulations, the Borrower agrees to be
subject to examination by, and for this purpose shall make its books and records
accessible to, NCUA.
a. Borrower shall be subject to examination by NCUA to the same extent as a
credit union federally insured by NCUA.
b. Borrower shall be subject to the provisions of 12 U.S.C. §1786 as if
Borrower were a credit union federally insured by NCUA.
c. Borrower shall make copies of its state examination reports available to
NCUA.
8. Overpayment and Underpayment:
In the event of borrower overpayment, payment above outstanding principle and
interest of less than or equal to $50.00 will not be repaid to the credit union based on
transaction costs. Payment above outstanding principle and interest of more than
$50.00 will be repaid to the credit union.

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In the event of borrower underpayment, NCUA will write-off outstanding principle
and interest payments of less than or equal to $50.00. However, underpayments of
more than $50.00 will be pursued.
9. Default:
Any one or more of the following is an event of default under this Loan Agreement
(an “Event of Default”) and, after giving any applicable notice or the expiration of
any applicable period of time, is a default under this Loan Agreement (a “Default”):
a. Nonpayment of any principal or interest when due with respect to the
Promissory Note, whether at maturity or otherwise.
b. Any representation or warranty Borrower makes in any agreement with
NCUA, including but not limited to this Loan Agreement, to which
Borrower is a party or by which it is bound, or any statement or
representation Borrower makes in any certificate, report or opinion, or other
document delivered pursuant thereto, is discovered to have been false in any
material respect when made.
c. Breach by Borrower of any term or provision of this Loan Agreement that is
not remedied or waived within thirty (30) days after notice of such breach
has been given to Borrower.
d. Borrower: (i) fails to pay, or admits in writing its inability to pay, its debts as
they become due, or otherwise becomes insolvent however evidenced; (ii)
files a petition or applies to any governmental authority for the appointment
of any receiver, conservator, or liquidating agent; (iii) has commenced
against it any proceeding for the appointment of any receiver, conservator,
or liquidating agent, or by any act indicates its consent to, approval of, or
acquiescence in any such proceeding or appointment; or (iv) takes any
corporate action to authorize any of the foregoing.
e. Borrower’s deteriorated financial condition. Determination of default due
to Borrower’s financial condition will be made by NCUA with consideration
of Borrower’s long term financial viability. Primary factors triggering
default may include, but are not limited to, a CAMEL rating downgrade or
unfavorable notification from a NCUA regional office. NCUA may also
consider indicators that Borrower is a candidate for merger, a purchase and
assumption transaction, or conservatorship. NCUA may also consider
additional information obtained through the examination process and data
contained in Call Reports.

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10. Remedies:
Upon any Default, NCUA may declare any or all liabilities secured by this Loan
Agreement immediately due and payable without further formal action or notice to
Borrower.
a. NCUA may take possession of the Nonmember Share Account without legal
process wherever it may be found and Borrower agrees to assist in the
recovery of and make available the Nonmember Share Account to NCUA,
which NCUA may sell or dispose of in any commercially reasonable
manner.
b. NCUA may notify those indebted to Borrower, and whose indebtedness has
been pledged to NCUA, to make payment directly to NCUA. The proceeds
from the Nonmember Share Account shall be applied first to the expenses of
reasonable attorney’s fees, and thereafter to the payment of all principal,
interest and other obligations due under this Loan Agreement or any other
agreement with NCUA. Any surplus shall be returned to Borrower, and
Borrower shall be liable for any deficiency.
c. Borrower agrees to pay or reimburse NCUA for all of its reasonable costs
and expenses incurred in connection with the enforcement or preservation of
any of its rights under this Loan Agreement, including without limitation,
court costs, filing fees, taxes, and other expenses.
11. Waiver:
NCUA may delay enforcing any of its rights under the Promissory Note and this
Loan Agreement but any such delay is not a waiver. With or without notice, the
obligations of Borrower to NCUA will not in any manner be discharged, impaired
or affected by:
a. Any delay in acting or failure to act by NCUA with regard to pursuing any
remedy against Borrower;
b. Any waiver, consent, action or acquiescence by NCUA at any time with
respect to any Default under the Promissory Note of this Loan Agreement;
or
c. Any extension of any of Borrower’s obligations under the Promissory Note
or this Loan Agreement. No waiver of any Default is a waiver of any other
Default or of the same Default on future occasions.
12. Construction and Effect:
This Loan Agreement has been delivered at the state of [State of the Credit Union]
and will be construed in accordance with the Uniform Commercial Code, Article 9

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and other applicable federal laws and regulations and laws of [State of the Credit
Union]. Whenever possible each provision of this note and agreement will be
interpreted so as to be effective and valid under applicable law; however, if any
provision is prohibited by or invalid under applicable law, such provision will be
ineffective to the extent of such prohibition or invalidity without invalidating the
remainder of the provision or the remaining provisions of the note and agreement.
This Loan Agreement creates a continuing security interest in the Nonmember
Share Account and:
a. remains in full force and effect until payment in full of the liabilities;
b. remains in full force and effect regardless of a termination or modification of
any other agreement with NCUA; and
c. is binding upon and inure to the benefit of the parties and all future holders
of the Promissory Note or other agreement with NCUA, and their respective
successors and assigns.

IN WITNESS WHEREOF, Borrower and NCUA, by their authorized representatives,
have executed this Loan Agreement.
[Credit Union Name]
By: ______________________________
Name: ____________________________
Title: _____________________________
NATIONAL CREDIT UNION ADMINISTRATION, AS ADMINISTRATOR OF
THE COMMUNITY DEVELOPMENT REVOLVING LOAN FUND
By: _______________________________
Name: _____________________________
Title: ______________________________

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[Loan Effective Date]
NCUA Security Agreement – 100%
Grant of Security Interest:
Borrower hereby assigns, transfers, and pledges to NCUA, and grants to NCUA, a
continuing security interest in the collateral as set forth below, and all proceeds of the
collateral, to secure the payment of Borrower’s indebtedness to NCUA and other
indebtedness and obligations of any and every kind and nature, previously, now or
subsequently owing from Borrower to NCUA, however incurred:
A first priority security interest in the following described securities:
______________________________________________________________________
Insert (or attach) a detailed description of the collateral.
Include such information as:
Name of owner
CUSIP #
Description of the U.S. Treasury security
Original face amount
Maturity Date
Pay Frequency
Payable Date (day of the month)
Date posted with CDRLF
This is for perfection by taking “possession” of the collateral.

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[Loan Effective Date]
NCUA Security Agreement – 110%
Grant of Security Interest:
Debtor hereby assigns, transfers, and pledges to Secured Party, and grants to Secured
Party, a continuing security interest in the collateral as set forth below, and all proceeds
of the collateral, to secure the payment of Debtor’s indebtedness to Secured Party and
other indebtedness and obligations of any and every kind and nature, previously, now or
subsequently owing from Debtor to Secured Party, however incurred:
A first priority security interest in the following described assets of the Debtor having a
net book value of at least 110 percent of the outstanding loan amount:
______________________________________________________________________
Insert (or attach) a detailed description of the collateral, the net book value ($ dollar
amount), and other identifying matters.
Include such information as:
Name of owner
CUSIP #
Description of the U.S. Treasury security
Original face amount
Maturity Date
Pay Frequency
Payable Date (day of the month)
Date posted with CDRLF
This is for perfection by taking “possession” of the collateral.

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Office of Credit Union Resources and Expansion
CDRLF Loan Agreement • 2018
OMB Control Number 3133-0138