Revolving Credit Facility Agreement Template

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Key Components of a Revolving Credit Facility Agreement

A revolving credit facility agreement 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 financing is often used by businesses to meet short-term working capital needs.

Revolving Loan Agreement Template: Pre-built template  airSlate
Revolving Loan Agreement Template: Pre-built template airSlate

Here are the key components that should be included in a professional revolving credit facility agreement template:

1. Parties

Borrower: The entity that is receiving the credit facility.

  • Lender: The financial institution providing the credit facility.

  • 2. Credit Limit

  • The maximum amount of credit that the borrower can access under the agreement.
  • 3. Interest Rate

  • The rate at which interest will be charged on the outstanding balance of the loan. This may be a fixed rate or a variable rate based on a benchmark index.
  • 4. Repayment Terms

  • The terms and conditions for repaying the outstanding balance of the loan, including the minimum monthly payment and any prepayment penalties.
  • 5. Security

  • Any collateral that the borrower is providing to secure the loan. This may include assets such as property, equipment, or accounts receivable.
  • 6. Covenants

  • Provisions that the borrower must comply with in order to maintain the credit facility. These may include financial ratios, restrictions on debt, and limitations on certain business activities.
  • 7. Events of Default

  • Circumstances that could trigger a default under the agreement, such as failure to make payments, breach of covenants, or insolvency.
  • 8. Remedies

  • The actions that the lender can take in the event of a default, such as accelerating the loan, seizing collateral, or filing for bankruptcy.
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    9. Governing Law

  • The jurisdiction that will govern the interpretation and enforcement of the agreement.
  • 10. Dispute Resolution

  • The process for resolving disputes that may arise between the borrower and the lender. This may include mediation, arbitration, or litigation.
  • Designing a Professional Revolving Credit Facility Agreement Template

    When designing a revolving credit facility agreement template, it is important to consider the following elements:

    Font Choice

  • Serif Fonts: These fonts are more traditional and formal, such as Times New Roman or Garamond. They are often used in legal documents.
  • Sans-Serif Fonts: These fonts are more modern and clean, such as Arial or Helvetica. They can be used for headings and subheadings to improve readability.

  • Page Layout

  • Margins: Use consistent margins throughout the document to create a balanced appearance.
  • Spacing: Use appropriate line spacing to ensure that the text is easy to read.
  • Alignment: Align the text to the left or justify it to create a more professional look.

  • Headers and Footers

  • Headers: Include the document title, page number, and date in the header.
  • Footers: Include the borrower’s name, lender’s name, and agreement number in the footer.

  • Formatting

  • Headings: Use headings and subheadings to organize the document and make it easier to navigate.
  • Lists: Use numbered or bulleted lists to present information in a clear and concise manner.
  • Tables: Use tables to present complex data in a structured format.

  • Language and Tone

  • Clarity: Use clear and concise language that is easy to understand.
  • Objectivity: Avoid using subjective language or making assumptions.
  • Formality: Maintain a formal tone throughout the document.

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  • Conclusion

    A well-designed revolving credit facility agreement template is essential for establishing a clear and legally binding relationship between a borrower and a lender. By following the guidelines outlined in this guide, you can create a professional and effective template that will protect the interests of both parties.