Credit Facility

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What is a 'Credit Facility'

A credit facility is a type of loan made in a business or corporate finance context. Specific types of credit facilities are: revolving credit, term loans, committed facilities, letters of credit and most retail credit accounts.

BREAKING DOWN 'Credit Facility'

Companies frequently implement a credit facility in conjunction with closing a round of equity financing (raising money by selling shares of its stock). A key consideration for any company is how it will incorporate debt in its capital structure, at the same time it must consider the parameters of its equity financing. The company must look at its capital structure as a whole, determining how much capital it needs immediately and over time, and the combination of equity and debt that it will use to fulfill those requirements.

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RELATED FAQS
  1. What are the differences between revolving credit and a line of credit?

    Understand how to differentiate between a line of credit and a revolving credit account, and find out why business owners ... Read Answer >>
  2. What are some reasons banks deny applications for checking accounts?

    Understand what a revolving credit account is and what a general line of credit is, and learn the differences between the ... Read Answer >>
  3. What are some examples of good situations in which to use revolving credit?

    Learn how to use revolving credit responsibly, and find out how to avoid major credit problems with your revolving credit ... Read Answer >>
  4. What are the differences between revolving credit and installment credit?

    Discover how to distinguish between installment credit loans and revolving credit loans, and learn how they affect your credit ... Read Answer >>
  5. What is the difference between bad credit and no credit?

    The answer to this question will depend on what information (if any) is found on your credit report, such as any bankruptcy ... Read Answer >>
  6. What is the difference between a loan and a line of credit?

    Learn to differentiate between lines of credit and standard loans, and determine when you are likely to use each method of ... Read Answer >>
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