Facility

 

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Definition of 'Facility'
A term used to describe financial assistance programs offered by lending institutions to help companies requiring capital

Investopedia explains 'Facility'
These financial assistance programs are merely another name for loans taken on by companies. Examples of such facilities include swingline loans and lines of credit. Often you will hear of companies obtaining different credit facilities, as they can vary between committed or uncommitted.

 

Definition of 'Facility'
A formal financial assistance program offered by a lending institution to help a company that requires operating capital. Types of facilities include overdraft services, deferred payment plans, lines of credit, revolving credit, term loans, letters of credit and swingline loans. A facility is essentially another name for a loan taken out by a company.

 
Investopedia explains 'Facility'
Facilities can be committed, meaning that they specify a precise amount of funds that will be provided, or uncommitted, meaning that the lender has not agreed to provide a specified amount of funding. Different types of facilities are available to meet different business needs, such as seasonal financing and the payment of creditors.

 

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Definition of 'Uncommitted Facility'
An agreement between a lender and a borrower whereby the lender agrees to make funding available to the borrower, but is under no obligation to provide a specific amount of money. Uncommitted facility loans are generally for a short period of time (i.e., less than one year). This is in contrast to a committed facility that involves clearly defined terms and conditions set forth by the lending institution and imposed upon the borrower.  Investopedia explains 'Uncommitted Facility'
Uncommitted facilities are used to finance seasonal or temporary needs, such as paying creditors to earn trade discounts, single (one-off) transactions, meeting payroll obligations and the needs of seasonal businesses with fluctuating revenues. Uncommitted facilities are generally less costly to arrange (compared with committed facilities), because the lender has no obligation to extend the loan; when financing is made available, it is short term and the credit risk will be comparatively small.

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