Facility

In plain terms

A facility is the agreement that makes finance available to you — the framework, rather than a single lump of cash. When a lender approves a facility, they're committing to provide funding up to an agreed limit, on agreed terms, which you can then use as your business needs.

The word is deliberately broad. A term loan, an overdraft, an invoice finance line and a revolving credit line are all facilities. What they share is a defined limit, a price, and a set of conditions. Think of it as the lender opening a door of a fixed size — how far you walk through is up to you.

Common types of facility

Facilities fall into a few broad shapes:

• Term facility — a fixed sum drawn in one go and repaid over a set period; see term loan.
• Revolving facility — a reusable limit you can draw, repay and redraw, like a revolving credit facility or overdraft.
• Committed facility — the lender is contractually bound to provide the funds when you ask.
• Uncommitted facility — funding is available in principle but at the lender's discretion each time.

Credicorp's Flex facility is a revolving working-capital line — drawn and repaid as cash flow demands.

Why it matters to your business

Understanding the type of facility you hold tells you what you can actually rely on. A committed revolving facility is a genuine safety net: the headroom is there whenever you need it, which makes planning easier. An uncommitted one is more like a polite indication, and shouldn't be treated as guaranteed cash.

The structure also shapes cost. With a revolving facility you usually pay interest only on what you've drawn, sometimes plus a small fee on the unused portion. With a term facility you pay for the whole sum from day one. Matching the facility to the job — short-term gaps versus a one-off purchase — is how you avoid paying for money you aren't using.

Choosing the right facility

The right facility follows the shape of your need:

• Predictable, one-off cost (a vehicle, an expansion): a term facility with fixed repayments.
• Fluctuating, recurring gaps (seasonality, late-paying customers): a revolving facility you dip in and out of.
• Funding tied to sales: an invoice finance facility that grows with your ledger.

Always read the terms for arrangement fees, the headroom you actually get, and any conditions on drawdown. Our guide to short versus long-term finance helps match the facility to the timescale.