What Is a Credit Facility, and How Does It Work?

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credit facility meaning

Promptly after the incurrence of any Reimbursement Obligation, Barclays shall apply any and all funds then on deposit in the Collateral Account to the repayment of such Reimbursement Obligation so long as Barclays is not prevented from doing so by operation of law, legal proceeding or otherwise. The Borrower hereby authorizes Barclays to take such action necessary to effect such repayment (including debiting the Control Account and, to the extent necessary, causing the sale or liquidation credit facility meaning of investments therein in order to obtain immediately available funds ) and agrees any loss resulting from any such sale or liquidation would be for the sole account of the Borrower. Credit facilities are used extensively across the financial market as a means of providing funding for various purposes. These are often acquired in tandem with the final round of the overall equity funding plan of a company, which includes both the credit facility and investment in equities.

All obligations provided for in this Section 10.10 shall survive expiration or termination of the Letters of Credit, any foreclosure under, or any modification, release, discharge or termination of, any or all of the Loan Documents. Without limitation of the form that a Replacement Liquidity Facility otherwise may have pursuant to the preceding sentence, a Replacement Liquidity Facility for any Class of Certificates may have a stated expiration date earlier than 15 days after the Final Legal Distribution Date of such Class of Certificates so long as such Replacement Liquidity Facility provides for a Non-Extension Drawing as contemplated by Section 3.5 hereof. The credit facility agreement addresses the legalities that may arise under specific loan conditions, such as a company defaulting on a loan payment or requesting a cancellation.


Sub-limits follow a hierarchical setup pattern and are an optional setup component. Select if this facility is secured by physical or financial collateral. Bank issues a LETTER OF CREDIT in addressed to the supplier or exporter after it, supplier or exporter will supply the goods to such unknown buyer or importer.

credit facility meaning

The Company is a limited liability company validly existing and in good standing under the laws of the State of Michigan. If, upon the occurrence of any event giving rise to the operation of Sections 5.3, 5.4 or 5.5, Barclays will, if requested by the Company, use reasonable efforts to designate another lending office for any Letters of Credit affected by such event, with the object of avoiding the consequences of such event; provided that such designation is made on terms that, in the sole judgment of Barclays, cause Barclays and its lending office to suffer no economic, legal or regulatory disadvantage. On or prior to the Closing Date Barclays shall execute and deliver to the Company United States Internal Revenue Service Form W-8ECI or any successor form thereto establishing that Barclays is exempt from withholding or deduction of Taxes. The Company shall not be required to pay additional amounts to Barclays pursuant to this Section 5.3to the extent that the obligation to pay such additional amounts would not have arisen but for the failure of Barclays to comply with this paragraph. The Company shall give Barclays at least five Business Days’ irrevocable prior notice , or such shorter period as Barclays may agree, specifying the Business Day each Letter of Credit is to be issued, the account party or parties therefor and the proposed form of such Letter of Credit. The meanings of defined terms are equally applicable to the singular and plural forms of the defined terms.

Term Loans under Structured Mezzanine Credit Facility from Banks are secured by first ranking pari-passu charge on lands at “The Orchid” at Vile Parle together with hotel buildings and all appurtenances thereon, Credit Card receivables personal and corporate guarantees of certain promoter directors and entities and certain other collateral securities. In the company in case of default, generally after venture capital companies and other senior lenders are paid. Bridge LoanA bridge loan is a short-term financing option for homeowners looking to replace their current home and pay off their mortgage either by paying interest on a regular basis or by paying a lump sum interest when the loan is paid off. Add credit facility to one of your lists below, or create a new one. We’ll be renewing certain aspects of our league credit facility.

Exporter availing PCFC is naturally hedged as loans are in foreign currency which will be repaid by post-shipment finance which will be in foreign currency. The security asked for the limits depends upon availability of ECGC cover, Order backed by LC etc. Following this, Bank of New York pays “Proline” and looks over to “Atlantis” for reimbursement generally by debiting “Atlantis’s bank account. A Bill Of LadingBill of lading is the legal document issued by the carrier to the shipper. It captures all the details about the shipment, such as quantity, type, and destination of the consignment. It serves as the shipment receipt when the carrier hands over the consignment to the intended merchant.

Enter the predefined collateral code to categorize a piece of collateral for bank-specific Basel II processing requirements. It is an informational attribute that does not trigger the credit risk engine’s processing logic. In addition to facility limits, you can use the credit limit as an additional limit setting for reporting purposes; however, it is not currently used for Basel II processing. The credit risk engine uses the facility level limits and sub-limits.

What is the Retail Credit Facility?

Terms used but not defined in this Certificate shall have the meanings assigned thereto in the Credit Agreement. Keep books and records which accurately reflect all of its business affairs and transactions and permit Barclays or any of its representatives, upon reasonable prior notice and at reasonable times and intervals, to visit all of its offices, to discuss its financial matters with its officers and independent public accountant and to examine any of its books or other corporate records. The Company shall pay any fees of such independent public accountant incurred in connection with the exercise by Barclays of its rights pursuant to this Section. The audited consolidated balance sheet of the Parent and its consolidated Subsidiaries as at December 28, 2008 and the related consolidated statements of earnings and cash flow, copies of each of which have been furnished to Barclays, have been prepared in accordance with GAAP consistently applied , and present fairly the consolidated financial condition of the Persons covered thereby as at the date thereof and the results of their operations for the period then ended. The unaudited consolidated balance sheet of the Parent and its consolidated Subsidiaries as at March 22, 2009 and the related consolidated statements of earnings and cash flow, copies of each of which have been furnished to Barclays, have been prepared in accordance with GAAP consistently applied , and present fairly the consolidated financial condition of the Persons covered thereby as at the date thereof and the results of their operations then ended.

credit facility meaning

This Agreement may use several different limitations, tests or measurements to regulate the same or similar matters. All such limitations, tests and measurements are cumulative and each shall be performed in accordance with its terms. Any change in the Base Rate due to a change in the Prime Rate or the Federal Funds Rate shall be effective as of the opening of business on the effective date of such change in the Prime Rate or the Federal Funds Rate, respectively. Prime Ratemeans the rate of interest per annum publicly announced from time to time by Barclays as its prime rate in effect at its principal office in New York City .

FAQ on LTC Cash Voucher Scheme

Any representation or warranty made by the Company in any Loan Document is breached or is false or misleading in any material respect, or any schedule, certificate, financial statement, report, notice or other writing furnished by the Company to Barclays at any time in connection herewith is false or misleading in any material respect on the date as of which the facts therein set forth are stated or certified. Certified copy of the limited liability company agreement of the Company then in effect. Keep all material property and systems useful and necessary in its business in good working order and condition, ordinary wear and tear excepted and maintain with financially sound and reputable insurance companies insurance in at least such amounts and against at least such risks as are usually insured against in the same general area by companies engaged in the same or similar business. Promptly upon becoming aware of the occurrence of any Event of Default, any Unmatured Event of Default, any default with respect to any other Indebtedness of the Company or a Subsidiary or any default under any other material agreement of the Company or a Subsidiary, written notice describing the same and the steps being taken by the Company or the Subsidiary affected thereby with respect thereto.

A covenant is a commitment in a bond or other formal debt agreement that certain activities will or will not be undertaken. What are the types of Corporate , SME, Syndicate & Commercial Credit Faci… The primary disadvantage is that the securities required should be adequate, and the adequacy is evaluated time and again, https://1investing.in/ which increases administrative work for the business. For example, assume the following simple transaction from the CC account of XYZ Pvt Ltd, whose interest rate is 12%, and borrowing / sanctioned limit is 1,000,000. Use the Customer Group page to define the counterparties or customers who are part of a customer group.

  • Also, a business needs to build a strong credit history, making obtaining such facilities easy.
  • I have been practicing law exclusively in the areas of business and real estate transactions since joining the profession in 2003.
  • As part of the loan agreement, a company must often track and maintain financial covenants and disclose certain metrics as part of external financial reporting.
  • LOC credit facilities make it easier to do business overseas without tying up a buyer’s cash reserves.
  • Retail businesses or retail real estate programs may obtain funding in the form of a retail credit facility for their own needs.
  • Banks such as IDBI, Bank of India, HDFC amongst many others provide the facility to avail cash credit to businesses to finance their day to day expenses which include procurement of raw materials, stores, fuel, for payment of wages for labor, power charges, for storing goods till they are sold out, etc.

Retail lending is typically a complex process that is accomplished through a third-party relationship with a credit provider. Retail businesses or real estate retail programs may get funding for their own needs in the form of a retail credit facility. In this situation, the company is working with a lender, often a large bank, to get a credit portfolio that can be used to fund business-related operations and ventures. In a revolving credit facility, the occurrence of an event of default normally also allows the lender to cancel any obligations to make further loan advances.

The two types are i) Short term facilities as a working capital requirement and ii) Long term facilities required for capital expenditure or acquisition-related expenses. A credit facility is more flexible, as the agreement allows a borrower to take on debt only when it needs. In addition, the borrower often has more flexibility around how much it can take and the reasons to use debt.

More meanings of credit facility

A credit facility is a funding solution that businesses can use to finance various expenses during a predetermined term. Credit facilities can be revolving, which means the borrower can withdraw some or all of a predetermined amount until the end of the term. Credit facilities can function as conventional term loans as well. A credit facility is a type of financing businesses use to finance ongoing capital needs. Credit facilities can be revolving, allowing businesses to draw from a line of credit on an as-needed basis, or a conventional term loan.

What is Packing Credit facility?

Unless otherwise expressly provided herein, references to agreements and other contractual instruments shall be deemed to include all subsequent amendments and other modifications thereto, but only to the extent such amendments and other modifications are not prohibited by the terms of this Agreement, and references to any statute or regulation shall be construed as including all statutory and regulatory provisions amending, replacing, supplementing or interpreting such statute or regulation. Subsidiary means, with respect to any Person, a corporation, partnership, limited liability company or other entity of which such Person and/or its other Subsidiaries own, directly or indirectly, outstanding shares or other ownership interests as have more than 50% of the ordinary voting power for the election of directors or other managers of such corporation, partnership, limited liability company or other entity. Unless the context otherwise requires, each reference to Subsidiaries herein shall be a reference to Subsidiaries of the Company. Revolver Facility means the credit facility as described in and subject to the limitations set forth in Section 2.01. Facility Letter of Credit Obligations means, as at the time of determination thereof, all liabilities, whether actual or contingent, of the Borrower with respect to Facility Letters of Credit, including the sum of the Reimbursement Obligations and the aggregate undrawn face amount of the then outstanding Facility Letters of Credit.

I left private practice earlier this year, took a few months off for my wedding and honeymoon, and am currently exploring legal consulting opportunities. This Agreement shall be binding upon the Company, Barclays and their respective successors and assigns, and shall inure to the benefit of the Company, Barclays and their successors and assigns; provided, the Company shall not be permitted to assign its rights or obligations hereunder without the prior written consent of Barclays, which may be denied in Barclays’ sole discretion. Barclays may at any time sell to one or more Persons a participating interest in the Commitment, or other interests of Barclays hereunder; provided, however, that no such participation shall relieve Barclays from its Commitment or its other obligations hereunder (and the Company acknowledges and agrees that each such participant, for purposes of Sections 5.3, 5.4, 5.5, 10.3 and 10.10, shall be entitled to the same benefits as Barclays as if such participant were named therein as such). Any final judgment or order for the payment of money shall be rendered against the Company or any of its Subsidiaries which is not stayed or discharged within 60 days after entry of such final judgment or order, and there shall be any period of more than 60 consecutive days following entry of the final judgment or order during which a stay of enforcement of such final judgment or order, by reason of a pending appeal or otherwise, shall not be in effect. Barclays shall have received the audited consolidated balance sheet of the Parent and its consolidated Subsidiaries as at December 28, 2008 and the related consolidated statements of earnings and cash flow and the unaudited consolidated balance sheet of the Parent and its consolidated Subsidiaries as at March 22, 2009 and the related consolidated statements of earnings and cash flow, in each case prepared in accordance with GAAP consistently applied. On each day during the period commencing with the issuance by Barclays of any Letter of Credit and until such Letter of Credit shall have expired or been terminated, the Commitment shall be deemed to be utilized for all purposes of this Agreement in an amount equal to the then outstanding Letter of Credit Liabilities with respect to such Letter of Credit.

As with many other financial products, credit facility interest rates are typically set at a base rate plus a spread. For revolving credit facilities, interest applies only to the amount drawn and can be repaid as cash becomes available—as long as the full amount borrowed is repaid by the end of the term. A credit facility can either be classified as short-term or long-term.

Whereas other regular bank accounts always have a debit balance- denoted as “Dr.” balance. A statement of Barclays as to any such additional amount or amounts shall, in the absence of manifest error and if made in good faith, be conclusive and binding on the Company. In determining such amount, Barclays may use any method of averaging and attribution that it shall deem applicable.

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