A draft loan agreement is an early version of a legally binding contract between two parties in which one party (the lender) promises to give the other party (the borrower) a sum of money in exchange for some form of collateral or consideration. It outlines the terms and conditions under which the loan will be given, including the payment schedule, the interest rate, and any fees or charges related to the loan. Draft loan agreements are an important tool used by businesses to ensure that their transactions are secure and legally recognized.