Term Loan Facility Agreement Definition

11. Oktober 2021

The lender should only have the right to demand repayment of the loan if an event of default has occurred and continues. If the omission has been corrected or rescinded, the lender should cease to do so. The temporary loan comes with a fixed or variable interest rate based on a reference rate such as the US policy rate or the Libor (London InterBank Offered Rate) -, a monthly or quarterly repayment plan and a fixed maturity date. If the proceeds of the loan are used to finance the purchase of an asset, the useful life of that asset may affect the repayment plan. The loan requires guarantees and a rigorous approval process to reduce the risk of default or non-payment. However, temporary loans generally do not come with penalties if they are repaid prematurely. An institution is especially important for companies that want to avoid things like laying off workers, slowing growth, or shutting down during seasonal, low-revenue sales cycles. Interest rate: The interest margin should reflect that defined in the lender`s letter of offer/term-sheet. LIBOR and mandatory bank fees must also be paid.

Any provisions relating to the increase or reduction of the interest margin (known as the „margin slide“) should also correctly reflect the lender`s letter of offer/term-sheet. A facility agreement can be divided into four sections: advances: a borrower must ensure that he has some flexibility to make advances (repay the credit in advance) without additional costs being incurred if possible. However, advances are only allowed at the end of interest periods, which avoids the payment of termination fees and, in most cases, is in the best interest of the borrower. Particular attention should be paid to all mandatory instalments (e.g. B in the case of sale or, in the case of private companies, to a float) and all advance costs to be paid. Guarantees and guarantees: these must be carefully examined in all transactions. It should be noted, however, that the purpose of guarantees and guarantees in a contract of establishment differs from their purpose in contracts of sale. The lender will not attempt to sue the borrower for breach of a guarantee and guarantee – rather, it will use an infringement as a mechanism to declare an event of default and/or request repayment of the loan.

A disclosure letter is therefore not required with respect to insurance and guarantees in establishment agreements. There are usually „standard“ negotiating points raised by borrowers, for example.B. a standard definition of significant adverse changes/effects usually focuses on the impact that may have something on the debtor`s ability to fulfill its obligations under the corresponding facility agreement. The borrower may try to limit this to his own obligations (and not those of other debtors), the borrower`s payment obligations and (sometimes) his financial obligations. Any positive commitment that the lender`s facility will always prevail over the borrower`s other debts may be refused, as this is not always within the borrower`s control. A negative assurance that the borrower will not take steps to influence the ranking of the facility may be an acceptable alternative. A credit agreement is the document in which a lender – usually a bank or other financial institution – sets out the terms under which it is willing to grant a loan to a borrower. Credit agreements are often referred to by their more technical name „Facility Agreements“ – a loan is a banking „facility“ that the lender offers to its customer….


Mein Name ist Matthias Regge aka. Prinny. Ich schreibe über Videospiele und bizarre Dinge, die sich in meinem Kopf abspielen.

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