What is the difference between secured and unsecured credit facilities?

A secured facility is backed by assets such as property, receivables, shares, or other business assets. An unsecured facility is not backed by specific collateral and may have stricter financial terms.

Can a facility agreement be used for business borrowing in the UK?

Yes. A facility agreement can be used for business lending, shareholder or group company lending, working capital funding, acquisition finance, and other commercial credit arrangements.

What terms are included in a UK facility agreement?

Key terms usually include the facility limit, interest rate, availability period, repayment terms, fees, drawdown process, covenants, events of default, security, and governing law.

How is interest calculated on a line of credit facility?

Interest may be fixed, variable, or linked to a reference rate such as the Bank of England base rate or SONIA, plus a margin agreed between the lender and borrower.

Do I need a written facility agreement for a UK line of credit?

A facility agreement is strongly recommended because it records the parties’ rights and obligations, reduces disputes, and sets clear rules for borrowing, repayment, interest, default, and enforcement.

What is the difference between a line of credit and a term loan?

A line of credit allows flexible drawdowns up to a limit, while a term loan usually provides a fixed amount borrowed for a set period with a scheduled repayment plan.

Can a facility agreement include covenants?

Yes. A UK facility agreement can include financial covenants, reporting obligations, restrictions on further borrowing, and other controls to protect the lender.

What happens if the borrower defaults under a facility agreement?

Default may allow the lender to stop further drawdowns, demand immediate repayment, charge default interest, enforce security, or use other remedies stated in the agreement.

Which law should govern a UK line of credit facility agreement?

For UK use, the agreement should usually be governed by the laws of England and Wales, Scotland, or Northern Ireland, depending on the parties and transaction.

Where can I create a UK line of credit facility agreement?

You can generate a tailored UK line of credit facility agreement using the main facility agreement document page linked from this guide.

EN-GB>Finance>Facility Agreement>UK Line of Credit Facility Types

UK Line Of Credit Facility Types

Created: 9 Jun 2026

Explore key UK line of credit facility types and why they matter for borrowers, lenders, and advisers. This overview helps you compare options and understand relevant agreement structures alongside our AI Generated British Facility Agreement resources.

Description	Typical Borrower	Typical Term	Security Position	Key Agreement Provisions
Revolving credit facility
Committed line allowing drawdown, repayment and redraw during the availability period.	Business borrower Group company borrower	Medium term	Either	Commitment, availability, utilisation requests, repayment and redraw, margin, fees, covenants, events of default.
Overdraft facility
Current account credit allowing withdrawals above the account balance, often repayable on demand.	Business borrower Individual borrower	On demand	Either	Limit, interest, fees, review date, demand repayment, set-off, account operation restrictions.
Uncommitted money market line
Discretionary short-term credit line where the lender may refuse each requested advance.	Business borrower Group company borrower	Short term	Unsecured	Lender discretion, dealing confirmations, interest period, repayment date, market disruption, netting.
Committed working capital facility
Committed credit line for day-to-day trading cash requirements and short operating cycle funding.	Business borrower	Short term Medium term	Either	Permitted purpose, utilisation conditions, cash sweep, financial covenants, reporting, clean-down requirement.
Seasonal working capital line
Facility sized for predictable seasonal stock, payroll or receivables peaks.	Business borrower	Short term Variable	Either	Seasonal limits, step-downs, clean-down periods, inventory reporting, covenant cure rights.
Standby facility
Back-up credit line available if another funding source is unavailable or insufficient.	Business borrower Group company borrower	Medium term Variable	Either	Drawing triggers, availability stop, commitment fee, cancellation rights, conditions precedent.
Swingline facility
Very short-term sub-facility used for same-day liquidity within a wider revolving facility.	Business borrower Group company borrower	Short term	Either	Swingline lender, sub-limit, same-day notice, rollover limits, refinancing into main facility.
Accordion facility
Option to increase commitments if lenders agree and specified conditions are satisfied.	Business borrower Group company borrower	Medium term Long term	Either	Increase request, accession of lenders, maximum commitments, ranking, fees, covenant recalculation.
Capex facility
Credit line used to fund capital expenditure, plant, machinery or major business assets.	Business borrower	Medium term Long term	Either	Permitted capex, drawdown evidence, amortisation, asset disposal restrictions, insurance undertakings.
Term loan with delayed drawdown
Term loan commitment drawn in one or more advances during an agreed availability period.	Business borrower Property borrower	Medium term Long term	Either	Availability period, drawdown milestones, conditions precedent, repayment schedule, undrawn commitment fees.
Bridging loan facility
Short-term facility bridging a funding gap before sale, refinance or longer-term funding.	Individual borrower Property borrower Business borrower	Short term	Secured	Exit strategy, default interest, valuation, legal charge, insurance, prepayment and extension fees.
Real estate development facility
Staged funding for acquisition, construction and development costs of a property project.	Property borrower	Medium term	Secured	Drawdown milestones, monitoring surveyor, cost-to-complete, presales, planning, step-in rights.
Commercial mortgage facility
Loan secured by commercial property, often used for purchase, refinance or investment holding.	Business borrower Property borrower	Medium term Long term	Secured	Legal charge, valuation, loan-to-value covenant, rent account, insurance, property undertakings.
Buy-to-let facility
Credit secured on residential property let to tenants for investment purposes.	Individual borrower Property borrower	Medium term Long term	Secured	Letting consent, rental cover, borrower occupancy restrictions, insurance, regulatory status confirmations.
Second charge loan facility
Loan secured by a second-ranking charge over property behind a first mortgagee.	Individual borrower Property borrower	Medium term Long term	Secured	Priority, consent of first charge holder, intercreditor terms, enforcement standstill, redemption mechanics.
Invoice discounting facility
Borrowing against eligible receivables while the borrower usually retains collection control.	Business borrower	Variable	Secured	Eligible debts, borrowing base, concentration limits, verification, dilution, trust account, recourse.
Factoring facility
Sale or assignment of receivables where the factor often manages collections from customers.	Business borrower	Variable	Secured	Assignment, notice to debtors, collection account, recourse, warranties, disputed debts, termination.
Receivables purchase facility
Facility for purchase of trade receivables, often structured as true sale or secured funding.	Business borrower	Variable	Either	Sale mechanics, eligibility criteria, repurchase events, collections, debtor notices, perfection.
Asset-based lending facility
Revolving facility secured against receivables, inventory, plant or other eligible business assets.	Business borrower	Medium term Variable	Secured	Borrowing base, reserves, appraisals, field exams, collateral reporting, cash dominion.
Inventory finance facility
Credit line advanced against eligible stock or inventory held by the borrower.	Business borrower	Short term Variable	Secured	Eligible stock, advance rates, stock audits, retention of title risk, insurance, location controls.
Trade finance facility
Facility supporting import, export or supply chain transactions through loans or contingent instruments.	Business borrower	Short term Variable	Either	Transaction documents, shipment evidence, sanctions, title documents, reimbursement, FX risk.
Import loan facility
Short-term credit funding imported goods until onward sale or receipt of customer payment.	Business borrower	Short term	Either	Import documents, goods title, repayment from sales, customs and VAT undertakings, insurance.
Export finance facility
Funding for exporters before or after shipment, sometimes supported by UK Export Finance products.	Business borrower	Short term Medium term	Either	Export contract, buyer risk, country risk, UKEF support, sanctions, shipment and payment evidence.
Letter of credit facility
Bank issues documentary credits supporting payment against compliant trade documents.	Business borrower	Short term Variable	Either	Issue request, reimbursement, UCP 600 incorporation, document compliance, expiry, cash cover.
Bank guarantee facility
Facility allowing a bank to issue guarantees supporting borrower payment or performance obligations.	Business borrower	Variable	Either	Guarantee form, reimbursement, commission, expiry, demand process, URDG 758 incorporation.
Performance bond facility
Facility for bonds supporting contractor performance under construction or supply contracts.	Business borrower	Variable	Either	Bond wording approval, beneficiary, underlying contract, reimbursement, expiry, counter-indemnity.
Ancillary facility
Sub-facility under a syndicated facility for overdrafts, guarantees, cards or treasury services.	Business borrower Group company borrower	Variable	Either	Ancillary lender designation, sub-limits, permitted products, utilisation reporting, termination.
Multi-option facility
Credit facility permitting different utilisation types, such as loans, letters of credit or guarantees.	Business borrower Group company borrower	Medium term Variable	Either	Utilisation options, sub-limits, reimbursement, pricing by product, cancellation and cash cover.
Multi-currency revolving facility
Revolving line allowing drawings in sterling and agreed foreign currencies.	Business borrower Group company borrower	Medium term	Either	Optional currencies, currency limits, exchange rate calculations, redenomination, increased costs.
Syndicated revolving facility
Revolving facility provided by multiple lenders under one finance document suite.	Business borrower Group company borrower	Medium term Long term	Either	Agent, majority lenders, transfers, pro rata sharing, accordion, amendments and waivers.
Bilateral revolving facility
Revolving credit line provided by a single lender to one or more borrowers.	Business borrower Group company borrower	Short term Medium term	Either	Commitment, utilisation notices, direct lender consents, events of default, set-off, assignment rights.
Club facility
Facility jointly provided by a small group of relationship lenders, often without broad syndication.	Business borrower Group company borrower	Medium term Long term	Either	Facility agent, lender commitments, consent thresholds, pro rata sharing, transfer restrictions.
Leveraged revolving facility
Revolving facility supporting a leveraged borrower, often alongside term debt or acquisition debt.	Business borrower Group company borrower	Medium term Long term	Secured	Leverage covenant, debt baskets, restricted payments, mandatory prepayment, intercreditor terms.
Acquisition facility
Facility funding a business or share acquisition, sometimes with revolving or delayed draw components.	Business borrower Group company borrower	Medium term Long term	Secured	Acquisition documents, funds flow, certain funds, conditions precedent, guarantees, financial assistance checks.
Project finance facility
Limited recourse facility repaid primarily from cash flows of a specific project.	Business borrower Other	Long term	Secured	Project documents, completion tests, cash waterfall, reserve accounts, step-in rights, direct agreements.
Subscription line facility
Fund-level credit line secured against investors' uncalled capital commitments.	Other	Short term Medium term	Secured	Capital call rights, investor eligibility, borrowing base, side letters, fund documents, enforcement powers.
NAV facility
Fund finance facility supported by net asset value of portfolio investments.	Other	Medium term Long term	Secured	NAV calculations, concentration limits, eligible investments, valuation disputes, distributions, collateral coverage.
Warehouse facility
Interim financing for a pool of assets before securitisation, sale or term funding.	Business borrower Other	Short term Medium term	Secured	Asset eligibility, advance rates, concentration limits, take-out, servicing, perfection, waterfall.
Repo facility
Financing by sale and repurchase of securities or other eligible collateral.	Business borrower Other	Short term	Secured	Purchased securities, repurchase price, margin calls, close-out netting, GMRA terms.
Securities-backed lending facility
Credit line secured against investment portfolio assets or marketable securities.	Individual borrower Business borrower	Variable	Secured	Collateral value, margin call, eligible securities, custody control, liquidation rights, concentration limits.
Personal line of credit
Flexible credit line for an individual, usually subject to consumer credit regulation unless exempt.	Individual borrower	Variable On demand	Unsecured	Credit limit, APR, pre-contract information, withdrawal rights, statements, default notices.
Consumer running-account credit
Regulated running-account credit where credit is repeatedly available up to a limit.	Individual borrower	Variable	Unsecured	CCA formality, credit limit, interest, statements, arrears notices, default notice, termination rights.
Credit card facility
Running-account credit accessed by card for purchases, cash advances or balance transfers.	Individual borrower Business borrower	Variable	Unsecured	Credit limit, APR, minimum payment, fees, statements, chargebacks, cardholder obligations.
Business credit card facility
Card-based credit for business expenses, often with company and cardholder liability terms.	Business borrower	Variable	Unsecured	Cardholder controls, spending limits, company liability, misuse, statements, fees, termination.
Merchant cash advance facility
Funding repaid from a percentage of card or payment receipts, often structured as receivables purchase.	Business borrower	Variable Short term	Either	Purchased receivables, remittance percentage, reconciliation, processor control, events of default.
Supply chain finance facility
Programme financing supplier invoices, often based on buyer approval and payment obligation.	Business borrower Other	Short term Variable	Either	Approved payables, buyer undertakings, supplier onboarding, payment date, assignment, disclosure.
Reverse factoring facility
Supplier finance arrangement where funder pays suppliers early and buyer repays later.	Business borrower Other	Short term Variable	Unsecured	Buyer confirmation, supplier terms, payment undertaking, derecognition, disclosure, termination impact.
Dealer floorplan facility
Inventory credit for dealers to finance vehicles, equipment or stock held for resale.	Business borrower	Short term Variable	Secured	Stock identification, curtailment, audit rights, sale proceeds, trust receipt, retention of title.
Equipment finance facility
Facility financing acquisition or use of business equipment, sometimes loan, hire purchase or lease-based.	Business borrower	Medium term Long term	Secured	Asset description, title, use restrictions, maintenance, insurance, repossession, purchase option.
Hire purchase credit facility
Credit for assets where title passes after instalments and any option fee are paid.	Individual borrower Business borrower	Medium term	Secured	Asset title, instalments, option to purchase, repossession, termination, regulated credit checks.
Lease finance facility
Funding arrangement where borrower uses assets under finance lease or operating lease terms.	Business borrower Individual borrower	Medium term Long term	Secured	Rental schedule, asset return, maintenance, insurance, tax treatment, early termination, title.
Shareholder loan facility
Credit line or loan from a shareholder to a company, often subordinated to external debt.	Business borrower Group company borrower	Variable Long term	Either	Subordination, interest accrual, repayment restrictions, conversion rights, shareholder approvals.
Intra-group revolving facility
Revolving credit arrangement between companies in the same corporate group.	Group company borrower	Variable	Unsecured	Transfer pricing, netting, limits, interest, withholding tax, subordination, board approvals.
Cash pooling facility
Group treasury arrangement centralising debit and credit balances across group accounts.	Group company borrower	Variable On demand	Either	Set-off, account sweeping, cross-guarantees, debit limits, insolvency risk, treasury authority.
Debenture-backed facility
Facility secured by a company debenture over assets, often including fixed and floating charges.	Business borrower Group company borrower	Medium term Long term Variable	Secured	Debenture, negative pledge, charge registration, floating charge, crystallisation, enforcement receiver.
Mezzanine facility
Junior debt facility ranking behind senior debt, often carrying higher margin or equity features.	Business borrower Group company borrower	Medium term Long term	Either	Subordination, payment blockage, PIK interest, warrants, intercreditor, restricted enforcement.
Unitranche facility
Single tranche debt combining senior and junior risk into one facility structure.	Business borrower Group company borrower	Medium term Long term	Secured	All-in margin, super senior RCF, intercreditor, debt baskets, call protection, covenants.
Green revolving credit facility
Revolving facility where proceeds are used for eligible green projects.	Business borrower Group company borrower	Medium term Long term	Either	Green use of proceeds, project eligibility, reporting, external review, proceeds management.
Sustainability-linked facility
Facility whose pricing changes according to agreed sustainability performance targets.	Business borrower Group company borrower	Medium term Long term	Either	KPIs, SPTs, margin ratchet, verification, reporting, declassification, anti-greenwashing.
Islamic revolving facility
Sharia-compliant facility structured without conventional interest, using approved Islamic finance contracts.	Business borrower Property borrower Group company borrower	Medium term Variable	Either	Commodity murabaha, wakala, profit calculation, Sharia compliance, purchase undertakings, agency.
Local authority borrowing facility
Borrowing facility for local authorities, often from PWLB or other public sector sources.	Other	Medium term Long term	Unsecured	Statutory powers, prudential borrowing, purpose, repayment profile, approvals, public law restrictions.
Charity loan facility
Facility to a charity requiring trustee authority and charitable purpose analysis.	Other	Medium term Long term Variable	Either	Trustee powers, charitable purpose, property restrictions, consents, conflicts, repayment affordability.
Partnership credit facility
Credit facility to a partnership, LLP or professional firm for working capital or drawings.	Business borrower Other	Variable Medium term	Either	Partner authority, joint and several liability, drawings, admissions and retirements, guarantees.
Agricultural overdraft facility
Seasonal overdraft for farms, often aligned with subsidy receipts, crop cycles or livestock sales.	Business borrower Individual borrower	Short term On demand Variable	Either	Seasonal limits, subsidy assignment, stock security, land charges, repayment from harvest proceeds.
Construction contractor working capital facility
Credit line supporting contractors' payroll, materials and timing gaps between valuations and payments.	Business borrower	Short term Medium term	Either	Contract receivables, adjudication risk, bonds, retention, project reporting, payment notices.
Healthcare practice facility
Facility for medical, dental or care practices funding working capital, premises or equipment.	Business borrower Other	Medium term Long term Variable	Either	Practice income, NHS or private contracts, regulatory licences, partner changes, key person risk.
Solicitors client account overdraft facility
Specialist overdraft involving law firm accounts, requiring strict client money protections.	Business borrower Other	On demand Variable	Either	Client money segregation, account mandate, no set-off over client funds, SRA compliance, reporting.
Emergency liquidity facility
Short-term liquidity support facility used in stressed funding conditions.	Business borrower Other	Short term	Secured	Eligible collateral, drawdown conditions, confidentiality, pricing, repayment triggers, regulatory approvals.
Demand loan facility
Loan or line repayable whenever the lender makes a valid demand.	Business borrower Individual borrower	On demand	Either	Demand procedure, repayment timing, interest accrual, security enforcement, borrower notice details.
Bullet repayment facility
Facility where principal is repaid in full at maturity rather than amortising over time.	Business borrower Property borrower Group company borrower	Short term Medium term Long term	Either	Maturity repayment, refinancing risk, interest periods, prepayment rights, financial covenants.
Amortising facility
Facility repaid by scheduled instalments over the term.	Business borrower Property borrower Individual borrower	Medium term Long term	Either	Repayment schedule, mandatory prepayment, debt service cover, payment dates, default interest.
Interest-only facility
Facility requiring periodic interest payments with principal due at maturity.	Individual borrower Property borrower Business borrower	Medium term Long term	Either	Repayment strategy, maturity date, affordability, interest periods, refinancing risk, LTV covenant.
Committed liquidity facility
Committed back-up liquidity line for treasury, settlement or regulatory liquidity planning.	Business borrower Other	Short term Medium term	Either	Drawdown conditions, eligible collateral, commitment fee, liquidity representations, cancellation triggers.

What Type Of UK Facility Agreement Is Most Appropriate?

Revolving credit facilities, overdrafts, invoice finance and receivables facilities are usually best suited to fluctuating working capital needs, because the borrower may need to draw, repay and redraw. By contrast, acquisition, capex, development and bridge facilities usually need tighter purpose, drawdown, repayment and security provisions.

When Should A Facility Agreement Be Secured?

UK business and property facilities are commonly secured where the lender relies on specific assets, receivables, real estate or group support. Security-driven facilities should address security documents, guarantees, debentures, fixed and floating charges, registration at Companies House and, for land security, HM Land Registry requirements.

Which UK Credit Facilities Need Extra Regulatory Care?

Facilities to individuals, sole traders or small partnerships may be regulated credit unless an exemption applies. Consumer credit, second charge, buy-to-let and certain bridging arrangements can raise Financial Services and Markets Act 2000, Consumer Credit Act 1974 and FCA perimeter issues, so the agreement type should be checked before drafting.

What Clauses Are Most Important In A Line Of Credit Facility?

Availability and drawdown mechanics are critical for revolving, overdraft, swingline, accordion and seasonal facilities.
Financial covenants and information undertakings are especially important for corporate, leveraged, asset-based and subscription line facilities.
Borrowing base, eligibility and concentration limits are central to inventory, receivables, asset-based and invoice finance facilities.
Cancellation, repayment on demand and review rights are particularly relevant for overdrafts, demand loans and committed or uncommitted working capital lines.

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FAQs

What is a UK line of credit facility?

A UK line of credit facility is a flexible borrowing arrangement that lets a borrower draw funds up to an agreed limit, repay them, and often redraw during the facility term, subject to the facility agreement.

What are the main types of line of credit facilities in the UK?

What is a revolving credit facility?

How is an overdraft facility different from a line of credit?

What is the difference between committed and uncommitted facilities?

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