What is a credit facility?

A credit facility is a financial arrangement between a lender and a borrower that allows the borrower to access funds up to a specified limit as needed. It can take various forms, such as a revolving credit line, term loan, or overdraft protection. Borrowers pay interest only on the amount drawn, making it a flexible financing option for businesses and individuals to manage cash flow or finance projects. Credit facilities are often secured by collateral or backed by the borrower's creditworthiness.