Credit facility - Financial definition
Concise definition of the term credit facility
A credit facility is a financial arrangement that allows a borrower to access a predetermined amount of funds as needed, often through loans or lines of credit.
Comprehensive definition of the term credit facility
In finance, a credit facility encompasses various arrangements tailored to meet borrowers' funding requirements, such as revolving credit lines, term loans, or standby letters of credit. These facilities are typically provided by banks or financial institutions and can serve diverse purposes, ranging from working capital financing to funding major capital expenditures or acquisitions.
Credit facilities offer flexibility, enabling borrowers to draw funds as needed within predetermined limits, repay, and redraw, often subject to certain conditions and interest rates. They are crucial for businesses to manage liquidity, seize growth opportunities, and navigate cash flow fluctuations effectively.