A credit facility is a loan agreement between a borrower and a lender that gives the borrower more flexibility than they would receive from standard loans. With a credit facility, the borrower does not need to reapply for a loan each time but can rather continue to borrow against the extended line of credit for a set amount of time.
Credit facilities are broken down into two categories: short-term and long-term. Examples of short-term credit facilities include short-term loans or trade finance, which helps companies maintain efficient cash conversion cycles. Some long-term credit facilities include term loans or bridge loans.