---
title: "Term Loan Facilities"
url: "https://legal.ge/en/service/banking-and-finance-law-en/term-loan-facilities-en"
field: "Banking & Finance Law"
description: "Term loans under the Georgian Civil Code: effective rate capped at 50%, daily penalties at 0.27%, loans up to 200,000 GEL issued in GEL only. Legal.ge."
reviewed: "2026-07-09"
updated: "2026-10-15"
publisher: "legal.ge"
---

# Term Loan Facilities

> Source: legal.ge, https://legal.ge/en/service/banking-and-finance-law-en/term-loan-facilities-en

## Concept, Essential Terms and Form

A term loan facility in Georgia is built on the loan contract regulated by the Civil Code of Georgia: under Article 623 the lender transfers money or another generic thing into the borrower's ownership, and the borrower undertakes to return a thing of the same kind, quality and quantity. What makes the facility "term" is that the repayment date is fixed in advance: under Article 626, where the loan is defined by a term in advance, both the principal and the interest must be paid when that term falls due. This structure distinguishes the term loan from demand arrangements, where repayment is triggered by termination of the contract rather than by a calendar date.

As to form, a loan contract is concluded orally, although the parties may agree on written form under Article 624. Written form matters in practice because the authenticity of an oral loan contract cannot be established by witness testimony alone. For any significant amount, documenting the loan terms and the transfer of funds is therefore not a formality but the borrower's core evidentiary protection in a future dispute.

The full text is available on legal.ge after signing in: https://legal.ge/en/service/banking-and-finance-law-en/term-loan-facilities-en

### What form does a loan contract take?

A loan contract is concluded orally; written form applies by agreement. Because an oral contract cannot be proven by witnesses alone, written fixation of the terms is recommended for meaningful amounts.

### How much interest can be charged?

The annual effective interest rate must not exceed 50 percent, a cap that applies to every type of loan. Mortgage-secured loans carry a separate monthly-rate ceiling based on market rates published by the National Bank of Georgia.

### What limits apply to penalties?

Penalties and financial sanctions must not exceed 0.27 percent of the outstanding principal per day, and cumulatively must not exceed 1.5 times the outstanding principal for each overdue event.

### Can a term loan be repaid early?

An interest-free loan may be repaid early; an interest-bearing loan only by prior agreement or the lender's consent. Early repayment commissions are capped at 2 percent of the outstanding principal.

### In which currency is a loan of up to 200,000 GEL issued?

Only in GEL, unless the borrower's aggregate obligations to the same lender exceed that amount. Currency-linked or indexed loans do not count as GEL loans.