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A credit facility is a type of loan made in a business or corporate finance context, including revolving creditterm loanscommitted facilitiesletters of credit and most retail credit accounts. Companies frequently implement a credit facility in conjunction with closing a round of equity financing or raising money by selling shares of its stock.

A key consideration for any company is how it will incorporate debt in its capital structure while considering the parameters of its equity financing. A business may use a credit facility rather than reapplying for a loan each time it needs money.

The company may take out a credit facility based on collateral that may be sold or substituted without altering the terms of the original contract. The time period for repaying the loan is flexible.

The contract opens with the basic contact information for each of the parties involved, followed by a summary and definition of the credit facility itself.

FXCM Beefs Up and Extends Credit Facility

Specific precedents on which the facility rests are included as well. For example, statements of collateral for secured loans or particular borrower responsibilities may be discussed.

The terms of interest payments, repayments and loan maturity are detailed. They include the interest rates and date for repayment, if a term loan, or the minimum payment amount and recurring payment dates, if a revolving loan. The agreement details whether interest rates buy creative edge nutrition stock change and specifies the date on which the loan matures, if applicable.

The credit facility agreement addresses the legalities that may arise under specific loan conditions, such as a company defaulting on a forex credit facility payment or requesting a cancelation. The section details penalties the borrower faces if defaulting and steps the borrower takes to remedy the default.

Credit Facility

A choice of law clause itemizes particular laws or jurisdictions consulted in case of future contract disputes. Dictionary Term Of The Day.

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Sophisticated content for financial advisors around investment strategies, industry trends, and advisor education. Revolving Loan Facility Facility Retail Credit Facility Closed-End Credit Facility Operations Loan Commitment Character Loan Multicurrency Note Facility Term Loan.

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