A facility agreement (sometimes called a loan agreement or credit agreement) is the formal legal contract that governs a business borrowing arrangement. It sets out every material term: the amount available, the interest rate or fee, the repayment schedule, any security taken, financial covenants the borrower must maintain, events of default, and the rights of both parties throughout the life of the facility. Signing a facility agreement is a significant legal commitment and the document should be read carefully before execution.
Key sections in a facility agreement
- Definitions: precise meanings of terms used throughout the contract, including what constitutes an event of default or a material adverse change.
- Conditions precedent: documents and confirmations the borrower must provide before the first drawdown can be made — for example, certified copies of corporate documents or evidence of insurance.
- Drawdown mechanics: how and when the borrower can request funds, the notice period required, and any minimum drawdown amounts.
- Repayment: the schedule of payments, whether amortising or bullet, and the consequences of early repayment.
- Representations and warranties: statements the borrower confirms as true at signing (and often repeated on each drawdown), such as the accuracy of financial information provided.
- Undertakings: ongoing obligations — positive (things the company must do) and negative (things it must not do without consent).
Facility agreements for Credicorp products
Each Credicorp product — the Business Loan, Credicorp Flex, and Credicorp Slice — is governed by its own facility agreement tailored to that product's structure. The agreement is the definitive source of truth for the terms that apply to your facility; any summary or marketing material is indicative only.
We lend only to UK limited companies and LLPs, and the loan is to the company with no director personal guarantee. As business finance outside the consumer-credit regime, it is not covered by the Financial Ombudsman Service or FSCS.
See also: What is a financial covenant in a business loan?, What is secured lending for UK businesses?.