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Credit Facility Letter

Credit Facility Letter Template for Canada

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Key Requirements PROMPT example:

Credit Facility Letter

"I need a Credit Facility Letter for a CAD 5 million revolving credit facility to a technology company, with quarterly financial covenants and floating interest rate based on Canadian Prime Rate plus 2%, to be made available by March 1, 2025."

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Document background
The Credit Facility Letter is a fundamental document in Canadian commercial lending practice, used when a financial institution extends credit to businesses or individuals. It is typically issued following a credit application and approval process, serving as the formal offer of financing. The document comprehensively outlines the terms of borrowing, including facility limits, interest rates, fees, security requirements, and conditions that must be met. Subject to Canadian federal banking regulations and provincial security laws, this document must comply with various regulatory requirements including the Bank Act, Interest Act, and provincial personal property security legislation. The Credit Facility Letter becomes a binding agreement once accepted by the borrower and forms the cornerstone of the lending relationship between the parties.
Suggested Sections

1. Letter Header: Date, recipient details, and reference information

2. Opening Statement: Confirmation of facility approval and reference to any previous discussions or applications

3. Facility Summary: Brief overview of the type and amount of credit facility being offered

4. Borrower Details: Full legal name and address of the borrower(s)

5. Facility Type and Amount: Detailed description of the credit facility type and the approved limit

6. Interest Rate and Fees: Applicable interest rates, calculation method, and all associated fees

7. Repayment Terms: Payment schedule, frequency, and method of payment

8. Security Requirements: List of required security and guarantees

9. Key Conditions: Essential conditions that must be met before and during the facility

10. Representations and Warranties: Standard declarations required from the borrower

11. Events of Default: Circumstances that would constitute default and consequences

12. Acceptance and Execution: Instructions for accepting the offer and signature blocks

Optional Sections

1. Revolving Credit Terms: Specific terms for revolving credit facilities, including reset periods and availability terms

2. Term Loan Specific Provisions: Specific provisions for term loans, including amortization schedule

3. Multiple Draw Down Provisions: Terms for facilities with multiple draw-down options

4. Guarantor Provisions: Additional terms when guarantors are involved

5. Foreign Currency Provisions: Terms for facilities offered in multiple currencies

6. Property Security Terms: Additional terms when real property security is required

7. Financial Covenants: Specific financial ratios or requirements for corporate borrowers

8. Insurance Requirements: Detailed insurance requirements for secured assets

9. Cross-Default Provisions: Terms relating to defaults under other facilities or agreements

Suggested Schedules

1. Schedule A - Fee Structure: Detailed breakdown of all applicable fees and charges

2. Schedule B - Security Details: Comprehensive list and description of required security

3. Schedule C - Conditions Precedent: List of conditions to be satisfied before facility availability

4. Schedule D - Draw Down Procedures: Detailed procedures for requesting and processing draws

5. Schedule E - Financial Covenant Calculations: Formulas and methods for calculating financial covenants

6. Schedule F - Permitted Security Interests: List of security interests that are permitted under the facility

7. Schedule G - Required Insurance: Detailed insurance requirements and minimum coverage amounts

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Linkedin in social icon imageX social icon image
alex.den.21@genieai.co
Relevant legal definitions
Availability Period
Business Day
Change of Control
Commitment
Conditions Precedent
Default
Event of Default
Facility
Facility Limit
Financial Indebtedness
Financial Statements
Guarantor
Interest Payment Date
Interest Period
Interest Rate
Material Adverse Effect
Maturity Date
Permitted Security Interest
Prime Rate
Reference Rate
Repayment Date
Security
Security Documents
Term
Utilization
Utilization Date
Secured Assets
Secured Obligations
Applicable Margin
Compliance Certificate
Draw Down Notice
Fees
Permitted Distribution
Related Party
Subsidiary
Relevant Industries

Banking and Financial Services

Commercial Real Estate

Manufacturing

Retail

Technology and Software

Healthcare

Construction

Agriculture

Transportation and Logistics

Energy and Utilities

Professional Services

Hospitality and Tourism

Relevant Teams

Legal

Finance

Treasury

Risk Management

Compliance

Credit

Corporate Banking

Commercial Banking

Operations

Business Development

Account Management

Relevant Roles

Chief Financial Officer

Finance Director

Treasury Manager

Credit Manager

Risk Manager

Commercial Lending Officer

Corporate Banking Officer

Legal Counsel

Compliance Officer

Financial Controller

Account Manager

Relationship Manager

Credit Analyst

Corporate Secretary

Business Development Manager

Industries
Bank Act (Canada): Federal legislation governing banking operations and regulation of banks in Canada, including requirements for credit facilities and lending practices
Interest Act (Canada): Federal law governing interest rates, calculation methods, and disclosure requirements for loans and credit facilities
Personal Property Security Act (PPSA): Provincial legislation governing the taking and registration of security interests in personal property (varies by province)
Criminal Code (Canada) - Section 347: Provisions regarding criminal interest rates and usury laws, setting maximum annual interest rates
Personal Information Protection and Electronic Documents Act (PIPEDA): Federal privacy law governing the collection, use, and disclosure of personal information in commercial activities
Proceeds of Crime (Money Laundering) and Terrorist Financing Act: Federal legislation requiring financial institutions to verify client identity and report suspicious transactions
Consumer Protection Act: Provincial legislation (varies by province) protecting consumer rights in financial transactions and requiring specific disclosures
Cost of Credit Disclosure Act: Provincial legislation (varies by province) requiring disclosure of credit costs and terms to borrowers
Business Practices and Consumer Protection Act: Provincial legislation governing business practices and providing additional consumer protections in financial transactions
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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