Friendly Loan Agreement Example (Kenya)
This is an example of a friendly loan agreement usable for anyone lending money to a friend, family member or colleague in Kenya; easily edited and download
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A friendly, interest-free loan agreement you can customize and download in minutes
A friendly loan and security agreement is the contract two people - or a person and a business - where one lends money to the other as a favour rather than as a commercial lender. This template is based on a Kenyan format and keeps the arrangement friendly: the loan is interest-free, repaid in fixed monthly installments, and backed by security (an item the borrower owns) that the lender can call on only if a default is not put right in time.
Just answer a few simple questions - the borrower's and lender's details, the loan amount and disbursement account, the installment amount and start date, and the security offered - and your personalized agreement is generated instantly, ready to download as PDF or Word.
What this loan agreement includes
- Clear identification of the Borrower and the Lender, and a plain recital of why the loan is being made
- The loan amount and the account the funds are sent to on execution
- An interest-free clause, with default interest that applies only for a month in which an installment is missed
- A repayment clause - a set number of equal monthly installments, a start date, and a fixed monthly due day
- A security clause creating a valid security interest in item(s) the borrower owns, activated only if a default is not rectified within the cure period
- A prepayment clause allowing early repayment with no penalty
- A dispute-resolution clause - mutual consultation first, then mediation, while preserving the right to go to court for urgent relief
- Severability, a confidentiality clause tied to local data-protection law, and an applicable-law clause
- An execution and signature block for both the Lender and the Borrower
How to create your loan agreement
1. Open the template and click Generate.
2. Answer the guided questions: the parties, the loan amount and account, the installments and start date, and the security.
3. Generate the document: your details are merged into the agreement automatically.
4. Review and download as PDF or Word, then sign, keep a copy, and record the repayment schedule.
Who is this loan agreement for?
People in Kenya lending to friends, family or colleagues who want the goodwill of a friendly, interest-free loan but still want it in writing and backed by security. It suits small personal loans repaid over a few months, and because the country and key figures are fields you fill in, the same format can be adapted where the arrangement and law are similar.
Disclaimer: This template is provided for convenience and general information only and is not legal advice. Lending, security-registration, data-protection and consumer-credit rules vary by country and by the type and amount of the loan. For larger loans, loans secured against valuable property, or anything you are unsure about, have the final agreement reviewed by a qualified lawyer before signing.
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What's included
- Professional formatting and layout
- Easy customization with guided questions
- Multiple export formats: pdf, docx
- Interest-free friendly-loan structure with security and default terms
- Instant download after generation
- Professional formatting and layout
- Easy customization with guided questions
- Multiple export formats: pdf, docx
- Legally reviewed and compliant
- Instant download after generation
What is a friendly loan and security agreement?
It is a written contract for a loan made as a favour rather than as a commercial arrangement — for example between friends, family or colleagues. This version is based on a Kenyan format: the loan is interest-free, repaid in fixed monthly installments, and backed by security (an item the borrower owns). Putting a friendly loan in writing keeps the goodwill while giving both sides a clear, enforceable record of what was lent and how it will be repaid.
Is the loan really interest-free?
Yes. Because it is a friendly arrangement, no interest is charged on the loan itself. The only interest that can arise is default interest — a monthly rate that applies to the outstanding balance for any month in which the borrower misses an installment. If every installment is paid on time, no interest is ever payable.
How does repayment work?
The loan is repaid in a set number of equal monthly installments that you choose, starting on a date you set. After the first payment, installments fall due on the same day each month (for example the 30th) until the loan is fully repaid. The borrower can also prepay all or part of the loan at any time with no penalty.
What does the security clause do?
The borrower grants the lender a security interest in item(s) they own — for example a laptop or phone. If the borrower defaults and does not put it right within the cure period (for example 30 days after being notified), the lender's rights over the security are activated. It gives the lender something to fall back on, while still allowing the parties to agree extensions or other arrangements.
What happens if there is a dispute?
The agreement asks the parties to try to resolve any dispute by mutual consultation first. If that does not work within the notice period, either party may refer the matter to mediation by an independent third party. Either party can still go to court for urgent relief. The agreement is governed by the law of the country you name (Kenya by default).
Can I use this outside Kenya?
It is built from a Kenyan friendly-loan format and references local data-protection and court rules through a country field you fill in. You can change that country, but lending, security-registration and data-protection rules differ from place to place, so if you are using it outside Kenya — or for a larger or secured loan — have it checked by a local lawyer first.
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