What is an availability period in a line of credit agreement?

The availability period is the time during which the borrower can draw down funds. After this period ends, further borrowing is usually not permitted.

What should the interest clause include?

An interest clause sets out the applicable interest rate, how it is calculated, when it is payable, and whether it is fixed, variable, or linked to a benchmark rate.

What does the repayment clause in a Facility Agreement mean?

The repayment clause explains when and how the borrower must repay the facility, including instalments, bullet repayment, early repayment rights, and final maturity date.

What fees are commonly included in a Facility Agreement?

Fees may include arrangement fees, commitment fees, utilisation fees, late payment fees, legal costs, and other charges agreed between the lender and borrower.

What are representations in a UK Facility Agreement?

Representations are statements of fact made by the borrower, such as confirming legal capacity, authority, solvency, and accuracy of information provided to the lender.

What are undertakings in a Facility Agreement?

Undertakings are promises by the borrower to do or avoid certain actions, such as maintaining insurance, providing accounts, paying taxes, or not taking on additional debt without consent.

What is an event of default in a Facility Agreement?

Events of default are circumstances that allow the lender to take action, such as missed payments, breach of agreement, insolvency, misrepresentation, or unauthorised disposal of assets.

What does a security clause cover in a Facility Agreement?

A security clause identifies any assets charged or pledged to secure repayment, such as property, equipment, receivables, shares, or other business assets.

What is a guarantee clause in a line of credit agreement?

A guarantee clause sets out a third party’s promise to repay the borrower’s obligations if the borrower fails to do so.

What are financial covenants in a Facility Agreement?

A financial covenant requires the borrower to maintain agreed financial ratios or targets, such as debt service cover, interest cover, or minimum net worth.

Why does a Facility Agreement need a governing law clause?

The governing law clause states which law applies to the agreement. For UK-based documents, this is commonly the law of England and Wales, Scotland, or Northern Ireland.

What is the purpose of a notices clause?

The notices clause explains how formal communications must be delivered, such as by email, post, courier, or to specified addresses.

What are boilerplate clauses in a Facility Agreement?

A boilerplate clause is a standard legal provision dealing with issues such as amendments, waiver, severability, counterparts, assignment, and entire agreement.

Can I use a clause guide before generating a Facility Agreement?

Yes. A clause guide helps you understand common legal wording, but a generated Facility Agreement should be tailored to the transaction and reviewed where appropriate.

Where can I generate a UK Facility Agreement online?

You can use the main Facility Agreement generator linked from this guide to create a tailored line of credit agreement for use in the United Kingdom.

EN-GB>Finance>Facility Agreement>UK Facility Agreement Clause Guide

Facility Agreement Clause Guide In The United Kingdom

Created: 9 Jun 2026

This guide helps readers understand key clauses in facility agreements and how they apply in the United Kingdom. It is useful for comparing terms, identifying negotiation points, and drafting with greater confidence. For related resources, see our AI Generated British Facility Agreement page.

Clause Category	Purpose	Importance Level	Drafting Note	Mainly Affects
Parties
Core commercial term	Identifies the lender, borrower, guarantors, agents and other parties.	Usually essential	Use exact legal names, registration numbers and addresses check capacity and authority.	All parties
Definitions And Interpretation
Boilerplate	Defines key terms and sets interpretation rules for the agreement.	Usually essential	Defined terms drive default triggers, covenants, interest and repayment mechanics.	All parties
Facility Amount
Core commercial term	States the maximum amount the lender agrees to make available.	Usually essential	Specify currency, committed amount, sub-limits and whether increases are permitted.	Borrower and lender
Type Of Facility
Core commercial term	States whether the facility is term, revolving, overdraft or another structure.	Usually essential	Facility type affects availability, redraw rights, repayment and commitment fees.	Borrower and lender
Purpose
Core commercial term	Limits how the borrower may use loan proceeds.	Usually essential	Align with credit approval breach usually gives lender default rights.	Borrower
Availability Period
Core commercial term	Sets the time during which the borrower may draw funds.	Usually essential	State start and end dates unused commitments usually cancel at expiry.	Borrower
Utilisation Request
Repayment and payment mechanics	Sets the notice and information required to draw down funds.	Usually essential	Include form, timing, bank account details and irrevocability of request.	Borrower
Conditions Precedent
Core commercial term	Lists documents and confirmations required before first drawdown.	Usually essential	Typically includes corporate approvals, constitutional documents, KYC and security documents.	Borrower and lender
Further Conditions To Utilisation
Core commercial term	Requires repeated confirmations before each drawing.	Common but transaction-specific	Often requires no default and repeated representations at each utilisation date.	Borrower
Commitment
Core commercial term	Records each lender's obligation to make funds available.	Usually essential	In syndicated deals, specify each lender's commitment and several liability.	Lender and borrower
Repayment Date
Repayment and payment mechanics	States when borrowed amounts must be repaid.	Usually essential	Use clear maturity date or repayment schedule to avoid payment disputes.	Borrower
Amortisation Schedule
Repayment and payment mechanics	Sets instalment amounts and dates for gradual repayment.	Common but transaction-specific	Check consistency with cash flow projections and financial covenant testing.	Borrower
Bullet Repayment
Repayment and payment mechanics	Requires repayment of principal in one amount at maturity.	Common but transaction-specific	Creates refinancing risk lender may require cash sweep or tighter covenants.	Borrower
Revolving Facility Repayment And Redrawing
Repayment and payment mechanics	Allows repaid amounts to be reborrowed during the availability period.	Common but transaction-specific	Define rollover mechanics, minimum drawings and final repayment clearly.	Borrower and lender
Voluntary Prepayment
Repayment and payment mechanics	Allows the borrower to repay early if notice and conditions are met.	Common but transaction-specific	Consider minimum amounts, notice, break costs and whether prepaid sums may be redrawn.	Borrower
Mandatory Prepayment
Repayment and payment mechanics	Requires early repayment after specified events such as disposals or insurance receipts.	Common but transaction-specific	Define trigger events, thresholds, reinvestment rights and timing.	Borrower
Change Of Control
Events of default	Protects lender if ownership or control of the borrower changes.	Common but transaction-specific	Specify control thresholds and whether event triggers default, cancellation or prepayment.	Borrower and lender
Cancellation Of Commitments
Repayment and payment mechanics	Allows undrawn commitments to be cancelled in agreed circumstances.	Usually essential	State whether cancellation is voluntary, automatic, permanent or pro rata.	Borrower and lender
Currency Of Payment
Repayment and payment mechanics	Specifies the currency in which payments must be made.	Usually essential	Include currency indemnity if liabilities may be enforced in another currency.	Borrower and lender
Payments
Repayment and payment mechanics	Sets how, where and when payments must be made.	Usually essential	Include payment accounts, cut-off times, cleared funds and no set-off wording.	Borrower
Business Day Convention
Repayment and payment mechanics	Adjusts payment dates falling on non-business days.	Usually essential	Choose following, modified following or preceding convention align with interest periods.	All parties
Application Of Payments
Repayment and payment mechanics	Sets the order in which received payments reduce obligations.	Usually essential	Usually applies costs, fees, interest, default interest, then principal.	Borrower and lender
Set-Off
Repayment and payment mechanics	Allows the lender to apply credit balances against amounts owed.	Common but transaction-specific	Borrowers often seek notice rights and limits on cross-currency set-off.	Borrower
No Set-Off Or Counterclaim
Repayment and payment mechanics	Requires borrower payments in full without deduction or counterclaim.	Usually essential	Should be drafted clearly, especially where consumer or statutory protections may apply.	Borrower
Interest Rate
Interest and fees	Sets how interest on drawn amounts is calculated.	Usually essential	State margin, benchmark, compounding if any, day count and calculation agent.	Borrower and lender
SONIA Benchmark
Interest and fees	Uses the Sterling Overnight Index Average as a sterling floating rate benchmark.	Common but transaction-specific	Include observation shift, lookback, compounded rate formula and fallback terms.	Borrower and lender
Base Rate Interest
Interest and fees	Links interest to a specified bank base rate or Bank Rate.	Common but transaction-specific	Define whose base rate applies and when changes take effect.	Borrower and lender
Fixed Rate Interest
Interest and fees	Applies a stated interest rate for all or part of the facility term.	Common but transaction-specific	Address break costs and prepayment restrictions if lender hedges funding.	Borrower and lender
Default Interest
Interest and fees	Increases interest on overdue amounts or during default.	Usually essential	Rate should be proportionate to avoid penalty arguments under English law.	Borrower
Interest Periods
Interest and fees	Defines periods for calculating and paying interest.	Usually essential	Align periods with repayment dates, rate-setting dates and business day rules.	All parties
Interest Payment Dates
Interest and fees	States when accrued interest must be paid.	Usually essential	Specify monthly, quarterly, maturity or other dates avoid mismatch with cash flow.	Borrower
Day Count Fraction
Interest and fees	Sets the formula for calculating daily interest accrual.	Usually essential	Common sterling market approach is actual days over 365 confirm product terms.	Borrower and lender
Commitment Fee
Interest and fees	Charges a fee on undrawn committed amounts.	Common but transaction-specific	State rate, accrual basis, payment dates and whether cancelled commitments stop fee accrual.	Borrower
Arrangement Fee
Interest and fees	Charges a fee for arranging or providing the facility.	Common but transaction-specific	Clarify when payable and whether refundable if drawdown does not occur.	Borrower
Agency Fee
Interest and fees	Pays an agent for administering a syndicated facility.	Common but transaction-specific	Usually documented in a fee letter define VAT treatment and annual timing.	Borrower and agent
Break Costs
Interest and fees	Compensates lender for funding losses caused by early payment or broken interest periods.	Common but transaction-specific	Borrower may request evidence and a cap avoid vague loss calculations.	Borrower
Costs And Expenses
Interest and fees	Requires borrower to reimburse agreed transaction and enforcement costs.	Usually essential	Specify legal fees, valuation costs, registration fees and enforcement expenses.	Borrower
Tax Gross-Up
Interest and fees	Requires borrower to increase payments if tax withholding applies.	Common but transaction-specific	Consider UK withholding tax, qualifying lender concepts and treaty relief.	Borrower and lender
Tax Indemnity
Interest and fees	Protects lender from certain tax liabilities connected with the facility.	Common but transaction-specific	Borrower should seek carve-outs for lender taxes on net income or tax misconduct.	Borrower and lender
VAT
Interest and fees	Allocates VAT costs on fees, costs and services under the facility.	Common but transaction-specific	State whether amounts are inclusive or exclusive of VAT and who bears irrecoverable VAT.	Borrower
FATCA
Interest and fees	Allocates compliance obligations and withholding risk under FATCA.	Common but transaction-specific	Mainly relevant for cross-border lending or financial institution parties.	Borrower and lender
Increased Costs
Interest and fees	Passes certain regulatory or funding cost increases to the borrower.	Common but transaction-specific	Borrowers often negotiate exclusions, mitigation duties and replacement lender rights.	Borrower
Market Disruption
Interest and fees	Provides alternative pricing if normal funding or benchmark markets fail.	Common but transaction-specific	Use with benchmark fallback provisions avoid lender-only subjective pricing where possible.	Borrower and lender
Benchmark Replacement
Interest and fees	Sets how a discontinued or unavailable interest benchmark is replaced.	Common but transaction-specific	Important after LIBOR transition include consent threshold and adjustment spread.	All parties
Security
Security and guarantees	Records collateral granted to secure the borrower's obligations.	Common but transaction-specific	Usually supported by separate debenture, legal charge, pledge or assignment.	Borrower and lender
Registration Of Charges
Security and guarantees	Requires registrable security granted by a UK company to be registered.	Specialist advice recommended	Late or missed Companies House registration can make security void against insolvency officials and creditors.	Lender and borrower
Guarantee
Security and guarantees	Makes a guarantor liable if the borrower fails to pay or perform.	Common but transaction-specific	Use indemnity wording and check corporate benefit, capacity and execution formalities.	Guarantor
All Monies Guarantee Or Security
Security and guarantees	Secures all present and future liabilities owed to the lender.	Common but transaction-specific	Borrowers and guarantors may seek limits by facility, amount or time.	Borrower and guarantor
Continuing Guarantee
Security and guarantees	Keeps guarantee liability in force despite repayments or account changes.	Common but transaction-specific	State revocation rights, final discharge mechanics and protection after repayment reversals.	Guarantor
Guarantee Limitations
Security and guarantees	Limits guarantee exposure by amount, law or corporate capacity.	Specialist advice recommended	Important for upstream, cross-stream and overseas guarantees insolvency and corporate benefit issues may arise.	Guarantor and lender
Security Trustee
Security and guarantees	Allows security to be held on trust for multiple finance parties.	Common but transaction-specific	Common in syndicated lending align with intercreditor and enforcement provisions.	Lenders and security trustee
Negative Pledge
Covenants	Restricts the borrower from granting security to other creditors.	Usually essential	Negotiate permitted security exceptions for ordinary trading and existing arrangements.	Borrower
Pari Passu Ranking
Covenants	Requires loan obligations to rank at least equally with other unsecured debt.	Usually essential	Subject to statutory preferred creditors and any agreed subordination.	Borrower and lender
Financial Indebtedness Restrictions
Covenants	Limits additional borrowing and debt-like obligations.	Common but transaction-specific	Define indebtedness carefully and include permitted debt baskets if needed.	Borrower
Disposals Restrictions
Covenants	Restricts sales or transfers of assets outside agreed exceptions.	Common but transaction-specific	Include ordinary-course disposals, obsolete assets and intra-group transfers if appropriate.	Borrower
Acquisitions Restrictions
Covenants	Limits acquisitions, investments or mergers by the borrower group.	Common but transaction-specific	Use financial thresholds and permitted acquisition criteria to avoid over-restriction.	Borrower
Dividends And Distributions Restrictions
Covenants	Restricts dividends, share buybacks and other value leakage.	Common but transaction-specific	UK companies can only make distributions from distributable profits.	Borrower and shareholders
Loans And Guarantees Restrictions
Covenants	Controls lending, guarantees and credit support given by the borrower group.	Common but transaction-specific	Permit ordinary trade credit and intra-group loans where commercially needed.	Borrower
Transactions With Affiliates
Covenants	Requires related-party transactions to be on arm's length terms.	Common but transaction-specific	Define affiliates and exempt ordinary-course or pre-agreed arrangements.	Borrower and shareholders
Change Of Business
Covenants	Prevents material change to the borrower's core business.	Common but transaction-specific	Define permitted business broadly enough for normal commercial evolution.	Borrower
Compliance With Laws
Covenants	Requires borrower group to comply with applicable laws and regulations.	Usually essential	Often qualified by materiality except for sanctions, anti-bribery and AML laws.	Borrower
Sanctions Compliance
Covenants	Prevents dealings that breach UK or other applicable sanctions regimes.	Usually essential	Include use-of-proceeds, sanctioned persons and notification obligations.	Borrower and lender
Anti-Bribery And Corruption
Covenants	Requires compliance with anti-bribery laws and policies.	Usually essential	The UK Bribery Act 2010 is central for UK corporate borrowers.	Borrower
Anti-Money Laundering
Covenants	Requires parties to avoid money laundering and provide KYC information.	Usually essential	Lenders may need customer due diligence under UK money laundering regulations.	Borrower and lender
Information Undertakings
Covenants	Requires delivery of accounts, budgets, compliance certificates and other information.	Usually essential	Set precise deadlines and formats link certificates to covenant testing dates.	Borrower
Financial Statements
Covenants	Requires periodic audited or management accounts.	Usually essential	Align with Companies Act filing and audit requirements where relevant.	Borrower
Financial Covenants
Covenants	Tests the borrower's financial health against agreed ratios or thresholds.	Common but transaction-specific	Definitions of EBITDA, debt and cash are heavily negotiated.	Borrower and lender
Leverage Ratio Covenant
Covenants	Limits debt relative to EBITDA or another earnings measure.	Common but transaction-specific	Agree testing frequency, cure rights and permitted EBITDA add-backs.	Borrower
Interest Cover Covenant
Covenants	Tests ability to pay finance charges from earnings or cash flow.	Common but transaction-specific	Ensure finance charges and EBITDA definitions match the business model.	Borrower
Debt Service Cover Ratio
Covenants	Measures cash flow against scheduled debt service.	Common but transaction-specific	Common in real estate, project and cash-flow lending define cash flow tightly.	Borrower and lender
Loan To Value Covenant
Covenants	Limits loan amount by reference to collateral value.	Common but transaction-specific	Important in real estate finance define valuation process and prepayment cure.	Borrower and lender
Insurance
Covenants	Requires appropriate insurance over business, assets or collateral.	Common but transaction-specific	Lender may require noting of interest, loss payee wording or insurance proceeds prepayment.	Borrower
Tax Compliance
Covenants	Requires timely payment and filing of material taxes.	Common but transaction-specific	Permit good-faith disputes where reserves are maintained.	Borrower
Environmental Compliance
Covenants	Requires compliance with environmental law and permits.	Common but transaction-specific	More important for property, manufacturing, waste, energy and infrastructure borrowers.	Borrower
Property Undertakings
Covenants	Maintains property collateral, title and lease compliance.	Common but transaction-specific	Include valuation rights, leases, planning, repairs and title issues for real estate finance.	Borrower
Authorisations
Covenants	Requires all material licences, consents and approvals to remain in force.	Usually essential	Tailor to regulated sectors, planning permissions and corporate approvals.	Borrower
Preservation Of Corporate Existence
Covenants	Requires borrower and obligors to remain validly existing entities.	Usually essential	Permit solvent reorganisations only with lender consent or agreed conditions.	Borrower and guarantor
Bank Accounts
Covenants	Controls where borrower accounts are held and how cash is managed.	Optional	Useful for asset-based, real estate and cash-controlled facilities.	Borrower
Cash Sweep
Repayment and payment mechanics	Requires surplus cash to prepay the facility.	Optional	Define excess cash, frequency, retention amounts and cure effects.	Borrower
Representations And Warranties
Core commercial term	Records factual statements the lender relies on when providing credit.	Usually essential	State repetition dates and qualify by materiality or knowledge where appropriate.	Borrower and guarantor
Status And Capacity Representation
Core commercial term	Confirms each obligor is validly existing and able to contract.	Usually essential	Check incorporation, constitutional documents and corporate power.	Borrower and guarantor
Binding Obligations Representation
Core commercial term	Confirms finance documents create valid and binding obligations.	Usually essential	Usually subject to legal reservations such as insolvency and equitable principles.	Borrower, guarantor and lender
Non-Conflict Representation
Core commercial term	Confirms finance documents do not breach law, constitution or contracts.	Usually essential	Borrower should review material contracts and existing finance documents.	Borrower and guarantor
No Default Representation
Core commercial term	Confirms no default exists under the facility or material contracts.	Usually essential	Define whether it covers defaults, potential defaults and third-party contracts.	Borrower
No Material Litigation
Core commercial term	Confirms no material disputes threaten the borrower's position.	Common but transaction-specific	Use monetary thresholds or material adverse effect wording to avoid overbreadth.	Borrower
Accounts Representation
Core commercial term	Confirms financial statements give a fair and accurate financial picture.	Usually essential	Tie to accounting standards and disclosed qualifications or audit notes.	Borrower
Solvency Representation
Core commercial term	Confirms borrower and obligors are not insolvent.	Usually essential	Consider statutory insolvency tests and directors' duties.	Borrower and guarantor
Ranking Representation
Core commercial term	Confirms the lender's claims rank as agreed.	Usually essential	Must be checked against security, intercreditor terms and statutory priorities.	Lender and borrower
Tax Representation
Core commercial term	Confirms tax filings and payments are materially up to date.	Common but transaction-specific	Borrower should disclose disputes and obtain materiality qualifications.	Borrower
Events Of Default
Events of default	Lists events that allow lender remedies such as acceleration or cancellation.	Usually essential	Negotiate cure periods, materiality thresholds and notice requirements.	Borrower and lender
Non-Payment Default
Events of default	Triggers default if borrower fails to pay on time.	Usually essential	Consider short grace periods for administrative or technical payment failures.	Borrower
Breach Of Covenant Default
Events of default	Triggers default if borrower breaches undertakings.	Usually essential	Operational covenants often have cure periods financial covenant breaches may not.	Borrower
Misrepresentation Default
Events of default	Triggers default if a representation is materially untrue or misleading.	Usually essential	Negotiate materiality and cure where inaccuracies can be remedied.	Borrower and guarantor
Cross-Default
Events of default	Triggers default if other financial debt defaults.	Common but transaction-specific	Borrower should seek thresholds, grace periods and cross-acceleration rather than cross-default.	Borrower
Insolvency Default
Events of default	Triggers default if borrower becomes unable to pay debts or insolvent.	Usually essential	Use UK statutory insolvency concepts carefully and include relevant overseas equivalents.	Borrower and lender
Insolvency Proceedings Default
Events of default	Triggers default on administration, liquidation, receivership or similar proceedings.	Usually essential	Include moratorium, restructuring plan and creditor action where relevant.	Borrower and lender
Creditor Process Default
Events of default	Triggers default if enforcement action is taken against borrower assets.	Common but transaction-specific	Use monetary thresholds and cure periods for disputed or minor claims.	Borrower
Unlawfulness And Invalidity Default
Events of default	Triggers default if obligations become unlawful, invalid or unenforceable.	Usually essential	Coordinate with illegality prepayment and sanctions provisions.	All parties
Repudiation And Rescission Default
Events of default	Triggers default if an obligor rejects or challenges finance documents.	Common but transaction-specific	Useful where guarantors or security providers might dispute obligations.	Borrower and guarantor
Cessation Of Business Default
Events of default	Triggers default if the borrower stops carrying on material business.	Common but transaction-specific	Qualify by materiality and permit disposals or reorganisations allowed by the agreement.	Borrower
Audit Qualification Default
Events of default	Triggers default if auditors qualify accounts in a serious way.	Optional	Limit to going concern or material adverse qualifications, not technical notes.	Borrower
Material Adverse Change
Events of default	Allows action if a serious adverse change affects credit risk.	Common but transaction-specific	Often resisted by borrowers due to uncertainty define objective limbs if possible.	Borrower and lender
Acceleration
Events of default	Allows lender to declare amounts immediately due after default.	Usually essential	State notice mechanics, automatic acceleration events and cancellation effects.	Borrower and lender
Enforcement
Security and guarantees	Sets when and how lender may enforce rights, security and guarantees.	Usually essential	Secured enforcement may involve insolvency, receivership and security document rules.	Borrower, guarantor and lender
Illegality
Repayment and payment mechanics	Allows cancellation or prepayment if lending becomes unlawful.	Usually essential	Include lender notification, mitigation and affected-lender mechanics.	Borrower and lender
Mitigation
Boilerplate	Requires affected finance parties to reduce avoidable costs or adverse effects.	Common but transaction-specific	Relevant to tax gross-up, increased costs, illegality and market disruption.	Lender
Indemnities
Interest and fees	Protects lender against specified losses linked to the facility.	Usually essential	Define covered losses, exclusions, evidence requirements and mitigation.	Borrower
Facility Agent Provisions
Boilerplate	Sets the agent's role, duties and protections in syndicated lending.	Common but transaction-specific	Important only where multiple lenders participate define instructions and liability limits.	Agent and lenders
Majority Lender Decisions
Boilerplate	Sets lender voting thresholds for consents, waivers and amendments.	Common but transaction-specific	Reserve all-lender consent for economics, maturity, security releases and core terms.	Borrower and lenders
Pro Rata Sharing
Boilerplate	Ensures lenders share recoveries proportionately in syndicated facilities.	Common but transaction-specific	Coordinate with set-off, enforcement proceeds and intercreditor arrangements.	Lenders
Assignments And Transfers By Lenders
Boilerplate	Allows lenders to transfer or assign rights to new finance parties.	Common but transaction-specific	Borrower may seek consent rights, transfer restrictions and tax cost protection.	Borrower and lenders
No Assignment By Borrower
Boilerplate	Prevents borrower transferring obligations without lender consent.	Usually essential	Consider permitted reorganisations or successor borrowers if group structure may change.	Borrower
Confidentiality
Boilerplate	Protects confidential commercial, financial and transaction information.	Usually essential	Allow disclosures to regulators, affiliates, advisers, transferees and credit insurers.	All parties
Data Protection
Boilerplate	Allocates obligations for personal data used in credit administration and KYC.	Common but transaction-specific	UK GDPR and Data Protection Act 2018 may apply to personal guarantor and beneficial owner data.	All parties
Notices
Boilerplate	Sets how formal communications are given and deemed received.	Usually essential	Include email rules, deemed receipt times and address update mechanics.	All parties
Electronic Communications
Boilerplate	Permits notices, documents and instructions to be sent electronically.	Common but transaction-specific	Clarify authorised email addresses, platform use and cyber-risk allocation.	All parties
Amendments And Waivers
Boilerplate	Sets how the agreement can be changed or rights waived.	Usually essential	Require written agreement and specify lender consent thresholds in syndicated deals.	All parties
Cumulative Remedies
Boilerplate	Confirms rights and remedies are additional, not exclusive.	Usually essential	Supports enforcement flexibility but cannot override mandatory law.	Lender
No Waiver
Boilerplate	Prevents delay or partial exercise from waiving rights.	Usually essential	Still use express reservation of rights when managing defaults.	Lender
Severability
Boilerplate	Keeps the agreement effective if one provision is invalid.	Usually essential	May not save a commercially essential invalid provision consider replacement wording.	All parties
Counterparts
Boilerplate	Allows parties to sign separate copies of the same agreement.	Usually essential	Useful for remote completion and multi-party facilities.	All parties
Electronic Signatures
Boilerplate	Allows execution using electronic signatures where legally valid.	Optional	Extra care is needed for deeds, witnesses and registrable security documents.	All parties
Execution As A Deed
Boilerplate	Ensures deed execution where required for guarantees or security.	Specialist advice recommended	Companies Act 2006 section 44 governs company execution of documents.	Borrower, guarantor and lender
Third Party Rights
Boilerplate	Controls whether non-parties can enforce terms.	Usually essential	Usually excludes the Contracts (Rights of Third Parties) Act 1999 or grants limited rights.	All parties and finance parties
Entire Agreement
Boilerplate	Confirms the written agreement supersedes prior negotiations and understandings.	Usually essential	Cannot exclude fraud consider carve-outs for fee letters and security documents.	All parties
Governing Law
Boilerplate	States which law governs the agreement.	Usually essential	UK facility agreements often choose English law check security law separately.	All parties
Jurisdiction
Boilerplate	Identifies courts that may hear disputes.	Usually essential	Choose exclusive or non-exclusive jurisdiction consider enforcement abroad.	All parties
Arbitration
Boilerplate	Refers disputes to private arbitration instead of courts.	Optional	Less common for standard UK bank lending consider enforcement and interim remedies.	All parties
Process Agent
Boilerplate	Appoints a UK agent to receive legal proceedings for overseas parties.	Common but transaction-specific	Important for non-UK borrowers or guarantors in English-law facilities.	Overseas borrower or guarantor
Service Of Process
Boilerplate	Sets agreed methods for serving court documents.	Common but transaction-specific	Must be consistent with court rules and any process agent appointment.	All parties
Consumer Credit And Regulatory Status
Other	Addresses whether the facility is regulated credit or exempt lending.	Specialist advice recommended	Consumer Credit Act and FCA perimeter issues can affect enforceability and authorisation.	Lender and borrower
FCA Authorisation
Other	Confirms any required regulatory permissions for lending activities.	Specialist advice recommended	Regulated lending without permission can create serious regulatory and enforceability risk.	Lender
Hedging Arrangements
Other	Requires or permits hedging of interest rate, currency or commodity risk.	Optional	Coordinate with security, intercreditor ranking, close-out amounts and FCA issues.	Borrower and hedge providers
Intercreditor Arrangements
Security and guarantees	Regulates priority, enforcement and turnover between creditor classes.	Specialist advice recommended	Essential where senior, mezzanine, shareholder or hedging debt co-exist.	Lenders, borrower and other creditors
Subordination
Security and guarantees	Ranks one creditor's claims behind another's claims.	Specialist advice recommended	Use payment blockage, turnover and insolvency wording coordinate with intercreditor terms.	Subordinated creditors and senior lender
Release Of Security And Guarantees
Security and guarantees	Sets when collateral and guarantees are released.	Usually essential	Define full discharge, permitted disposals, refinancing release and Companies House filings.	Borrower, guarantor and lender
Default Cure Rights
Events of default	Allows borrower to remedy certain breaches before lender enforcement.	Common but transaction-specific	Specify cure period, eligible defaults and whether repeated cures are limited.	Borrower and lender
Equity Cure
Covenants	Allows shareholder funds to cure financial covenant breaches.	Optional	Negotiate frequency, amount, EBITDA treatment and mandatory prepayment use.	Borrower, shareholders and lender
Margin Ratchet
Interest and fees	Adjusts margin based on leverage, rating or other performance metrics.	Optional	Tie changes to compliance certificates and specify when adjustments take effect.	Borrower and lender
Sustainability Linked Loan Provisions
Other	Links pricing or reporting to agreed sustainability performance targets.	Optional	Targets should be measurable, ambitious and supported by reporting and verification.	Borrower and lender
Funding Rate Confidentiality
Interest and fees	Protects lender funding cost information used in rate calculations.	Optional	Balance lender confidentiality with borrower verification rights for costs claimed.	Borrower and lender

What Clauses Matter Most In A UK Facility Agreement?

A UK facility agreement is not just a statement of loan amount and interest. The most important clauses usually define the facility, purpose, availability, repayment, interest, fees, representations, covenants, events of default and enforcement rights. If these clauses are vague, the parties may disagree about when funds must be advanced, when repayment is due, or when the lender can accelerate the debt.

Which Facility Agreement Clauses Need The Most Care?

Security, guarantees and priority clauses need careful drafting because enforceability often depends on company law, registration requirements and insolvency priority rules in the UK.
Financial covenants, information undertakings and events of default are heavily negotiated because they control how early the lender can intervene if the borrower\'s risk profile changes.
Interest, default interest, fees and break costs should be clear and commercially justifiable to reduce disputes over calculation and enforceability.
Illegality, sanctions, tax gross-up, FATCA/CRS and anti-money laundering provisions are especially important where lenders, borrowers or payments cross borders.

When Is Specialist Advice Recommended?

Specialist UK legal advice is strongly recommended for secured lending, syndicated lending, regulated consumer or SME credit, real estate finance, acquisition finance, project finance and any agreement involving guarantees, debentures, intercreditor arrangements or cross-border tax and sanctions issues.

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FAQs

What is a Facility Agreement in the United Kingdom?

A Facility Agreement is a legal contract setting out the terms of a loan or line of credit, including the amount available, interest, repayment terms, fees, security, and default provisions.

What is a Facility Agreement clause guide?

What clauses are usually included in a UK Facility Agreement?

What does the facility amount clause cover?

Why is the purpose clause important in a Facility Agreement?

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