Getting an AI-drafted loan agreement checked

A loan agreement produced with an AI drafting tool is usually a US promissory note in English clothing: a 'maker' and a 'holder', interest 'per annum compounded', 'attorneys' fees', a confession of judgment, and a governing law from a US state. In England and Wales the questions are different: whether the lending is a regulated activity, whether the default interest is a penalty, whether the security needs registering and the guarantee is signed in the right way, and what happens on default. I review the agreement against English law and the parties involved, and return it marked up with tracked changes, a clean copy and a written explanation of the changes, for a fixed fee of £495 in three working days.

Who this is for

Companies, directors, investors and business owners in England and Wales lending to or borrowing from a company, a business partner or a related party under a loan agreement drafted with an AI tool, from a director's loan to a bridging loan between businesses. Lending to individuals for personal purposes is regulated and is addressed on the page but not undertaken as a drafting service.

What the review checks in an AI-drafted loan agreement

Whether the loan is regulated lending

Lending to a company for its business is not regulated, but lending to an individual or a sole trader, or to a small partnership, can be a consumer credit agreement under the Consumer Credit Act 1974 and a regulated activity under section 19 of the Financial Services and Markets Act 2000, which requires authorisation unless an exemption applies. The review identifies who the borrower is and what the money is for, says whether the agreement falls within the regulated perimeter, and where it does, says so plainly rather than drafting around it.

Interest, default interest and the penalty rule

An AI draft often sets a default rate that steps up sharply on breach, or adds late charges on top of interest. In England a default rate is enforceable if it protects a legitimate interest and is not out of proportion to it, and a rate that is there to punish is a penalty and unenforceable. The review checks the rate, the default uplift and any fees against that rule, states how interest accrues and is calculated, and removes provisions that do not belong in a loan, such as interest and compensation under the Late Payment of Commercial Debts (Interest) Act 1998, which applies to the supply of goods and services rather than to lending.

Security, registration and guarantees

Where the borrower is a company and grants security, the charge must be registered at Companies House under section 859A of the Companies Act 2006 within the period the section sets, or it is void against a liquidator, an administrator and creditors. A guarantee must be in writing and signed by the guarantor under the Statute of Frauds 1677, and a director guaranteeing the company's loan needs to be advised where a spouse or a home is involved. The review checks the security described, the registration mechanics and the form of any guarantee, and drafts a debenture or a guarantee as a separate document where the AI draft has folded them into the loan.

Events of default, acceleration and enforcement

The review checks the events of default (non-payment, breach, insolvency, cross-default, change of control), whether they are triggered by an event or only after notice and a cure period, the lender's right to accelerate the whole loan, and how enforcement works in England, removing the US confession of judgment and the 'holder may set off any account' clause and replacing them with a demand mechanism, a set-off right the lender can operate, and the costs the lender may add to the debt.

Repayment, prepayment and the term

The review checks the repayment schedule, whether the borrower may repay early and on what notice and cost, whether the loan is repayable on demand or on a fixed date, and what happens at the end of the term, because an AI draft is often unclear whether the loan is a term loan or a demand facility, and the difference decides when limitation runs and when the lender can act.

Boilerplate, execution and directors' loans

The review replaces a US state's law and courts with English law and jurisdiction, removes the 'no third party beneficiaries' clause in favour of the exclusion of rights under section 1 of the Contracts (Rights of Third Parties) Act 1999, checks that the agreement is executed as the Companies Act 2006 requires, and, for a director's loan, notes the shareholder approval and disclosure that the Act may require and the tax consequences that need separate advice.

What it costs

Review of an AI-drafted contract, £495. One contract, returned as a marked-up Word document with my amendments as tracked changes, a clean version with the changes accepted, and a written explanation of the changes. Three working days from payment.

Buying online forms the engagement on payment. The scope is what the review of an ai-drafted contract page describes, you accept the Terms of Service at checkout, and I email you within four working hours to get started. If you would rather ask something first, email me.

What you get

• Your own Word document returned with every amendment I consider necessary shown as a tracked change, so you can see exactly what I changed and accept or reject each one
• A clean version with every change accepted, ready to send
• Corrections to anything that is wrong as a matter of English law, unenforceable as drafted, or internally inconsistent
• Missing provisions added where the document has left a gap that matters: usually liability, termination, payment, intellectual property or data
• Comments in the margin where a clause is a commercial choice rather than a legal one, so the decision stays yours
• A written explanation of what I have changed and why, by email or as an attachment if it is lengthy, with anything you should think about before sending it out
• Follow-up questions on the mark-up answered by email, included

What is not included

• A full rewrite. This is a review and amendment of your document, not a replacement for it. If the draft is structurally unsuitable for the deal, I will say so and quote separately for drafting it properly
• A second round of amendments after you have changed the document again, which I can quote for
• Negotiating with the other side
• Advice on the law of any jurisdiction other than England and Wales
• Tax, accounting or regulatory advice
• Reviewing a document the other side drafted, which is the contract review service, at the same price

Questions I am often asked

The draft charges twenty per cent default interest. Is that enforceable?

Only if it reflects the lender's legitimate interest in being paid and is not out of proportion to it. A rate that steps up to punish the borrower is a penalty and the court will not enforce it. The review sets a default rate that is defensible.

We are lending to a sole trader for his business. Is that regulated?

It can be. Lending to a sole trader or a small partnership can fall within the Consumer Credit Act 1974, and making regulated loans without authorisation is an offence. The review says whether the agreement is within the regulated perimeter before anything is signed.

The company has granted a charge over its assets in the loan itself. Is that enough?

The charge needs to be registered at Companies House within the statutory period or it is void against an insolvency officeholder and creditors. The review drafts the charge as a separate debenture and sets out the registration steps.

Related guidance and services

• Review of an AI-drafted contract, £495, the service this page describes
• Contract review, £495
• Reviewing a trade credit account application with a personal guarantee
• Getting an AI-drafted shareholders agreement checked

This page is general guidance for businesses in England and Wales, not advice on your own circumstances. Last reviewed: September 2026. Email geoffrey@caesar.co.uk.