Term Facility Agreement Template for Switzerland

A Term Facility Agreement is a comprehensive legal document that establishes the terms and conditions for a fixed-term loan between a lender and borrower in Switzerland. This agreement creates binding obligations under Swiss contract law, providing a structured framework for commercial lending while ensuring regulatory compliance and protecting the interests of all parties involved.

When do you need this document?

You need a Term Facility Agreement when establishing any fixed-term lending arrangement in Switzerland. Corporate entities frequently use this document for business expansion financing, acquisition funding, or working capital requirements. Real estate developers rely on these agreements for property development projects, while manufacturing companies use them for equipment purchases or facility upgrades. The document is essential for syndicated loans where multiple lenders participate, requiring clear coordination mechanisms and shared security arrangements. International transactions involving Swiss entities also require this agreement to ensure proper legal documentation and cross-border enforceability.

Key legal considerations

Your Term Facility Agreement must include comprehensive conditions precedent that protect the lender's position before any funds are advanced. Interest rate provisions should clearly specify calculation methods, payment dates, and any applicable margins or adjustments. Default provisions require careful drafting to ensure enforceability while providing appropriate cure periods and notice requirements. Security arrangements must be properly documented and perfected according to Swiss law requirements. Representations and warranties should cover the borrower's financial condition, legal capacity, and compliance with applicable laws. Covenant structures need to balance operational flexibility with lender protection, including financial reporting requirements and operational restrictions. Cross-default clauses should be carefully calibrated to avoid inadvertent acceleration of the facility.

Legal requirements in Switzerland

Swiss law requires Term Facility Agreements to comply with the Swiss Code of Obligations regarding contract formation, performance, and termination. The Swiss Federal Banking Act imposes specific requirements on financial institutions regarding lending practices, documentation, and risk assessment procedures. Anti-money laundering obligations under the Swiss Anti-Money Laundering Act require proper due diligence and verification of borrower identity and fund sources. Security interests must be perfected according to Swiss civil law requirements, with proper registration where applicable. The Swiss Debt Enforcement and Bankruptcy Act governs enforcement procedures and creditor rights in default scenarios. Interest rate provisions must comply with Swiss usury laws and consumer protection regulations where applicable. For international transactions, proper process agent appointments and jurisdiction clauses ensure enforceability across borders while meeting Swiss conflict of laws requirements.