It allows the borrowing business to take out money over an extended period of time rather than reapplying. You also need to define products containing attributes and preferences for processing participant facility, tranche or drawdown (deposit) contracts that are created under the related borrower facility, tranche or drawdown (loan) contracts. Term loans are usually committed facilities. When looking for a suitable precedent facility agreement, it is important to understand the nature of the loan transaction, as this will influence what precedent you need. A credit facility is a type of loan made in a business or corporate finance context. The lender's lawyers will usually, but not always, prepare the first draft of the facility agreement. See also Practice Note: Introductory guide to lending which explains the role of the facility agreement in the context of a loan transaction. It contains a table of useful precedents, guidance on how a facility agreement is structured, and some key areas to focus on when drafting and negotiating a facility agreement, together with links to more detailed materials.

This ‘How to’ guide provides an introduction to drafting and negotiating a facility agreement for those new to lending transactions.

Drawdown loan facility