Commercial Loan Documentation Essentials for Texas Banks

Last reviewed November 2026

Government guaranteed or not, every commercial loan rests on the same foundation: clear documents, perfected liens and a borrower the bank has checked out. This is the core package for a Texas commercial loan.

The core documents

Document	What it does	Texas notes
Promissory note	Evidences the debt: amount, rate, payments, maturity, default and late charges	Commercial loan interest is governed by the Texas Finance Code; include a usury savings clause and review any default rate
Loan agreement	Sets covenants, conditions to advances, reporting and defaults for larger or more complex loans	Include the conspicuous notice under Tex. Bus. & Com. Code sec. 26.02 for loans over $50,000
Deed of trust	Gives the bank a lien on real property with a power of sale	Texas allows nonjudicial foreclosure under Tex. Prop. Code sec. 51.002; include fixture and rents provisions
Assignment of leases and rents	Lets the bank collect rents after default	Coordinate with the deed of trust and tenant estoppels
Security agreement and UCC-1	Liens on equipment, inventory, receivables and other personal property	File with the Texas Secretary of State for Texas entities; fixture filings go in the county records
Guaranties	Owners or affiliates promise to pay	Include the waivers Texas law allows, such as the fair market value offset waiver under Tex. Prop. Code secs. 51.003-51.005, where appropriate
Environmental indemnity	Borrower and guarantors cover environmental losses	Pair it with an environmental review sized to the risk
Subordination, non-disturbance and attornment agreements and estoppels	Set the bank's position with tenants	Needed when tenant-occupied property is collateral

Texas Business and Commerce Code section 26.02 requires the written-agreement notice for loans over $50,000. The notice must be conspicuous and state substantially: "This written loan agreement represents the final agreement between the parties and may not be contradicted by evidence of prior, contemporaneous, or subsequent oral agreements of the parties. There are no unwritten oral agreements between the parties." It may be in a separate document the borrower signs or in the loan documents.

Diligence the bank should complete

Entity review: certificate of formation, company agreement or bylaws, authorizing resolutions, incumbency, and good standing with the Texas Secretary of State and the Comptroller (franchise tax).
Title: a title commitment and lender's policy (T-2) with appropriate endorsements, and review of every exception, including severed minerals, easements and restrictions.
Survey: a current survey certified to the bank and title company that supports amending the survey exception and shows access, encroachments and flood zone.
Flood: a standard flood hazard determination for every building taken as collateral, and flood insurance when required.
Environmental: a Phase I environmental site assessment under the All Appropriate Inquiries rule, or a lighter screen where the bank's policy allows for the property type.
Appraisal or evaluation that meets the bank's regulatory requirements.
Searches: UCC, tax lien, judgment and litigation searches on the borrower and guarantors.
Insurance: property, liability and flood certificates naming the bank under the right clauses.
Customer identification and beneficial ownership information under the bank's BSA program.

Construction loans

Construction loans add a construction loan agreement, the construction contract, plans and budget, assignments of the contract and plans, contractor and architect consents, a draw process with inspections and lien waivers, and attention to Texas mechanic's lien rules and retainage. Ask the title company about date-down endorsements at each draw.

Fixed-fee loan documentation

Kennedy Sutherland LLP prepares commercial loan documents for community banks at fixed fees by loan type, with a closing checklist and attorney review. See Loan Documentation or call 210.259.3885. Initial consultations for lenders are free.

Download the conventional commercial real estate loan closing checklist (PDF).

This guide is general information for lenders and borrowers, not legal advice. Reading it does not create an attorney-client relationship. SBA, USDA and FSA rules change often, so confirm the current program requirements and the terms of your loan's authorization or commitment before relying on it. Kennedy Sutherland LLP is a private law firm. It is not affiliated with or endorsed by SBA, USDA or FSA.

Sources

Sources checked November 2026.

Commercial Loan Documentation Essentials for Texas Community Banks