Term Facility Agreement Template for England and Wales

When you need to establish a formal lending arrangement with fixed terms and conditions, a Term Facility Agreement provides the essential legal framework under England and Wales law. This comprehensive document governs the relationship between lenders and borrowers, setting out everything from the loan amount and purpose to repayment schedules and security requirements. Unlike revolving credit facilities, term facilities provide a lump sum advance with predetermined repayment terms, making them ideal for specific financing needs with clear timelines.

When do you need this document?

You'll require a Term Facility Agreement when securing corporate financing for business acquisitions, expansion projects, or refinancing existing debt. Property developers commonly use these agreements for real estate development projects, while businesses seeking working capital or equipment financing rely on them for structured lending arrangements. The document is essential when multiple parties are involved, such as syndicated lending where several banks participate, or when security agents and guarantors provide additional protection. You'll also need this agreement when the lending arrangement exceeds simple overdraft facilities and requires detailed covenants, representations, and warranties.

Key legal considerations

The agreement must clearly define all parties' roles, including the facility agent who manages day-to-day administration and the security agent who holds security on behalf of lenders. Conditions precedent are crucial, as they establish what must be satisfied before funds can be drawn down, typically including legal opinions, insurance policies, and corporate approvals. Interest calculation methods, default provisions, and acceleration clauses require careful attention, as they determine the true cost of borrowing and consequences of breach. Representations and warranties create ongoing obligations for borrowers, while covenants establish operational and financial restrictions that borrowers must maintain throughout the facility term. Security provisions and guarantee structures provide lender protection but may significantly impact the borrower's operational flexibility.

Legal requirements in England and Wales

Under English law, Term Facility Agreements must comply with the Financial Services and Markets Act 2000, which requires authorized lenders and imposes conduct of business rules. The Consumer Credit Act 1974 applies when dealing with consumer borrowers, mandating specific disclosure requirements and cooling-off periods. All contract terms must satisfy the Unfair Contract Terms Act 1977 reasonableness test, while consumer agreements must comply with the Consumer Rights Act 2015 fairness and transparency requirements. FCA and PRA regulations impose additional compliance obligations on authorized lenders, including know-your-customer procedures and anti-money laundering checks under UK Money Laundering Regulations. The agreement must be properly executed as a deed or simple contract, with consideration clearly established, and any security interests must be registered at Companies House where applicable.