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Revolving Credit Facility Agreement for Canada

Revolving Credit Facility Agreement Template for Canada

A Canadian law-governed Revolving Credit Facility Agreement is a comprehensive financial contract that establishes a flexible borrowing arrangement between a lender (typically a financial institution) and a borrower. The agreement enables the borrower to draw down, repay, and redraw loans up to a specified maximum amount during the facility term. The document incorporates specific Canadian legal requirements, including compliance with federal banking regulations, provincial security laws, and applicable interest rate provisions. It details the facility's terms, conditions precedent, drawdown mechanics, repayment obligations, financial covenants, and security arrangements, while ensuring compliance with both federal and provincial Canadian legal frameworks.

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What is a Revolving Credit Facility Agreement?

The Revolving Credit Facility Agreement is a crucial financing document used when businesses require flexible access to credit that can be repeatedly drawn and repaid over time. This agreement type is particularly valuable for companies with cyclical business operations or varying working capital needs. Under Canadian law, these agreements must comply with federal legislation such as the Bank Act and Interest Act, as well as provincial security and property laws. The document typically includes detailed provisions on facility limits, interest calculations, security requirements, financial covenants, and reporting obligations. It's commonly used by medium to large enterprises seeking to establish or maintain a reliable source of ongoing financing, with the flexibility to manage their borrowing needs according to business requirements.

What sections should be included in a Revolving Credit Facility Agreement?

1. Parties: Identifies the lender(s), borrower(s), and any guarantors or other parties to the agreement

2. Background: Provides context for the agreement and basic transaction overview

3. Definitions and Interpretation: Defines key terms and establishes interpretation rules for the agreement

4. The Facility: Details the nature, amount, and purpose of the revolving credit facility

5. Purpose: Specifies permitted uses of the facility

6. Conditions Precedent: Lists conditions that must be satisfied before initial drawdown

7. Drawdown: Procedures and requirements for drawing down the facility

8. Repayment and Prepayment: Terms for mandatory repayment and voluntary prepayment

9. Interest: Interest calculation, payment dates, and default interest provisions

10. Fees: Details of commitment fees, arrangement fees, and other charges

11. Tax Gross Up and Indemnities: Provisions for tax-related payments and indemnities

12. Representations and Warranties: Borrower's statements of fact and assurances

13. Information Undertakings: Requirements for financial and other information provision

14. Financial Covenants: Financial ratios and tests the borrower must maintain

15. General Undertakings: Positive and negative covenants of the borrower

16. Events of Default: Circumstances that trigger default and lender remedies

17. Changes to Parties: Rules for assignments and transfers

18. Administration: Payment mechanics and administrative provisions

19. Notices: Communication procedures between parties

20. Governing Law and Jurisdiction: Choice of law and dispute resolution provisions

What sections are optional to include in a Revolving Credit Facility Agreement?

1. Security: Required if the facility is secured, detailing security arrangements and enforcement

2. Guarantee: Include when there are guarantors providing credit support

3. Accordion Feature: Optional provision allowing for future facility increase

4. Multi-currency Provisions: Required if facility can be drawn in multiple currencies

5. Agent and Security Trustee: Required in syndicated facilities with multiple lenders

6. Majority Lenders: Voting provisions required for syndicated facilities

7. Market Disruption: Provisions dealing with benchmark rate unavailability

8. Increased Costs: Provisions for regulatory changes affecting lenders' costs

9. Letter of Credit Facility: Include if facility includes letter of credit issuance

10. Bank Products: Include if agreement covers additional banking services

What schedules should be included in a Revolving Credit Facility Agreement?

1. Conditions Precedent Documents: List of required documentation for initial drawdown

2. Form of Drawdown Request: Standard form for borrower to request advances

3. Form of Compliance Certificate: Template for periodic financial covenant compliance certification

4. Repayment Schedule: If applicable, schedule of mandatory repayment dates

5. Form of Transfer Certificate: Standard form for transferring commitments between lenders

6. Form of Accession Deed: Template for additional parties joining the agreement

7. Financial Covenant Calculations: Detailed methodology for calculating financial covenants

8. Existing Security: List of permitted existing security interests

9. Borrowing Base Calculation: If applicable, methodology for calculating borrowing base

10. Fee Schedule: Detailed breakdown of all applicable fees

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

Canada

Publisher

Ƶ

Document Type

Loan Agreement

Sector

Banking

Cost

Free to use
Relevant legal definitions











































































Clauses








































Relevant Industries

Banking and Financial Services

Manufacturing

Real Estate

Retail

Technology

Healthcare

Energy and Resources

Infrastructure

Transportation and Logistics

Agriculture

Construction

Telecommunications

Relevant Teams

Legal

Finance

Treasury

Risk Management

Compliance

Credit

Corporate Banking

Syndications

Operations

Security Administration

Relevant Roles

Chief Financial Officer

Treasury Manager

Finance Director

Corporate Lawyer

Legal Counsel

Banking Relationship Manager

Credit Officer

Risk Manager

Compliance Officer

Financial Controller

Account Manager

Corporate Banking Officer

Syndications Manager

Security Trustee Officer

Transaction Manager

Industries









Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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