A revolving credit facility agreement template is a legal document that outlines the terms and conditions under which a lender provides a line of credit to a borrower. This type of credit arrangement allows the borrower to borrow funds up to a predetermined limit, repay the outstanding balance, and borrow again, repeatedly. The template serves as a foundation for negotiating and executing the final agreement between the lender and borrower.
Key Components of a Revolving Credit Facility Agreement Template
Revolving Credit Agreement Template – Fill Out, Sign Online and
A well-structured revolving credit facility agreement template typically includes the following essential components:
Parties
Lender: The financial institution or entity that provides the line of credit.
Borrower: The entity that receives the line of credit.
Credit Limit
Maximum Borrowing Amount: The highest amount the borrower can borrow at any given time.
Drawings and Repayments: The terms and conditions for drawing funds and repaying the outstanding balance.
Interest Rates
Base Rate: The benchmark interest rate used to calculate the interest charged on the outstanding balance.
Margin: The spread added to the base rate to determine the borrower’s effective interest rate.
Interest Calculation Method: The method used to calculate interest on the outstanding balance (e.g., simple interest, compound interest).
Fees and Charges
Commitment Fee: A fee charged by the lender for maintaining the line of credit, even if the borrower does not utilize it.
Upfront Fee: A fee charged by the lender at the outset of the agreement.
Other Fees: Any additional fees that may be applicable, such as late payment fees, overdraft fees, or administrative fees.
Repayment Terms
Repayment Schedule: The frequency and amount of required repayments.
Prepayment Options: The borrower’s ability to repay the outstanding balance in full or partially before the maturity date.
Default and Cure Provisions: The consequences of the borrower’s failure to meet its obligations and the remedies available to the lender.
Security and Collateral
Collateral: Any assets pledged by the borrower as security for the loan.
Security Interest: The lender’s legal interest in the collateral.
Perfection and Priority: The steps required to protect the lender’s interest in the collateral and establish priority over other creditors.
Events of Default
Default Events: Specific actions or events that constitute a default under the agreement.
Remedies: The actions the lender can take in response to a default, such as accelerating the outstanding balance, seizing collateral, or pursuing legal remedies.
Governing Law and Dispute Resolution
Governing Law: The jurisdiction that governs the agreement.
Dispute Resolution: The mechanisms for resolving disputes between the lender and borrower, such as arbitration or litigation.
Representations and Warranties
Representations: Statements made by the borrower about its financial condition, business operations, and other relevant matters.
Warranties: Assurances made by the borrower regarding the accuracy and truthfulness of its representations.
Miscellaneous Provisions
Notices: The procedures for giving notices under the agreement.
Assignment: The ability of the lender or borrower to assign their rights and obligations under the agreement.
Amendment: The procedures for modifying the terms of the agreement.
Severability: The provision that if any part of the agreement is found to be invalid, the remaining provisions shall remain in effect.
To create a revolving credit facility agreement template that conveys professionalism and trust, consider the following design elements:
Clear and Concise Language: Use plain language that is easy to understand, avoiding legal jargon whenever possible.
Consistent Formatting: Employ consistent formatting throughout the document, including font size, line spacing, and headings.
Professional Layout: Use a professional layout that is visually appealing and easy to read.
Attention to Detail: Pay attention to details such as spelling, grammar, and punctuation.
Legal Review: Have the template reviewed by a legal professional to ensure it complies with applicable laws and regulations.
By incorporating these essential components and design elements, you can create a revolving credit facility agreement template that provides a solid foundation for negotiating and executing a professional and legally sound agreement.
