A facility agreement is a written document executed between concerned parties centered on lender and borrower relations. It is also usually known as a loan or a credit facility agreement. It could also be signed into employers and employees as long as parties involved sign into an employee agreement complying with specified stipulations.
In the part of an employee, a non-compete agreement is also enforced so as for them not to enter into similar trade transactions with their employers. Any loan document could be considered a facility agreement and borrowers are expected to pay the lenders in a short term span.
Credit Facility Agreement Template
Core Research Facilities Agreement
What Is a Loan Facility Agreement?
A loan facility agreement is one type of loan agreement designed to generate a document that forms binding between a borrower and a lender. Both parties follow whatever terms and conditions they have agreed on, which basically includes the amount and the due compensation thereof. The lender usually structures the conditions set for the borrower to abide by.
Other Types of Loan Agreements
Be familiar with the different types of loan agreements and determine which agreement template could be ideal for the type of loan you would decide to engage in soon.
Here are different types of loan agreements and their respective brief descriptions that would help you distinguish which is which.
- Revolvers – This is a type of loan agreement that basically lets the borrower obtain a flexible means of repaying the lender. Other means could be a redraw of loans and re-borrowing from the lender advances to its initial and previous loans. Payment agreement templates could assist both lenders and borrowers to simplify their loan terms accordingly.
- Term Loans – A term loan on the other hand is a loan for mainly monetary purposes only. Most loans involve an interest rate that fluctuates from time to time and is subject to payment despite additional costs to the existing borrower’s balance.
- Working Capital Loans – This type of loan aims at providing finances for everyday company operations. Working capital loans are often for short-term financing only.
Financial Assistance Facility Agreement
Senior Facilities Agreement
Master Facility Agreement
Structure of a Facility Agreement
Departing from the enumeration of the different types of loan agreements above, focus on one type of loan agreement and get to know its structure and functionality as a whole.
Below is a structure of a specified facility agreement:
- Information of Parties – A detailed and well-written facility agreement is given to contain information concerning the main parties of the agreement. Names and other company identification is expected to appear as either a lender or a borrower depending on certain circumstances.
- General Contracting Provisions – This portion of the agreement should contain provisions on how to go about the interpretation of the document, and the main stipulations about the borrowing and payment obligations. Agreement templates in PDF file format could make use of a confidentiality agreement template that suggests how information should be managed between parties.
- Borrowing and Payment Mechanics – Both parties should know clearly about the borrowing and payment mechanics signed into by the borrower and the lender. The former should carefully take note of everything that the lender asks for since the agreement is generated from the initial action done by the lender.
Once you’ve familiarized on the structure of a facility agreement, you get to picture out how the document appears for it to be able to relay underlying terms and conditions between both parties.