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A simple loan agreement is a legal document that allows a lender to give access to money to a borrower with the intent on being paid back, at a specific particular date, and with interest. The amount of interest, usually described as a percentage (%) and compounded over a yearly basis, should be negotiated by the parties and may not be over the State’s usury limit.
Once signed by the borrower and lender and all funds have been disbursed the agreement is legally binding and if the borrower defaults the lender may pursue legal action through small claims courts.