Document background
The Credit Facility Letter is a fundamental document in U.S. commercial lending, used when a financial institution extends credit to businesses or individuals. It serves as the primary document establishing the lending relationship and terms of credit extension. The letter format provides a more concise alternative to a full facility agreement while maintaining legal enforceability. It must comply with federal regulations including the Truth in Lending Act, Equal Credit Opportunity Act, and state-specific lending laws. The document typically follows after initial credit approval and precedes the drawdown of funds, containing all essential terms including facility limits, pricing, security requirements, conditions precedent, and key covenants. It's particularly common in commercial banking for revolving credit facilities, term loans, and other structured financing arrangements.
