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What the facility letter is
Also called an offer letter or loan agreement, the facility letter is the lender's formal document setting out exactly what is on the table: how much, at what rate, over what term, with what fees, and subject to what conditions. It is the contract. Everything discussed informally becomes real — and only real — when it appears here.
What to check before signing
- Rate and total repayable — the headline and the full cost over the term.
- Fees — arrangement, facility and any early-repayment charges.
- Conditions precedent — what must happen before drawdown.
- Security and guarantees — any charge or personal guarantee required.
- Covenants — ongoing conditions you must keep to.
Signing it
You are not obliged to sign, and you should not until you understand it. For larger or secured facilities, taking legal advice is sensible. Check the numbers against the repayment calculator and confirm affordability with the affordability calculator. Once signed and any conditions met, the facility completes and you draw down.
Frequently asked questions
Is a facility letter legally binding?
Yes — signing it forms the loan agreement. That is why you should read every clause, understand the covenants and conditions, and take advice on larger or secured deals before signing.
Can I negotiate the terms in a facility letter?
Sometimes. Fees, early-repayment terms and covenants are occasionally negotiable, especially on larger deals. Ask before you sign; the worst answer is no, and it costs nothing to ask.
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