The Loan Facility Letter is a crucial document in Malaysian banking practice, used when a financial institution approves a loan or credit facility for a borrower. It represents the formal offer of financing and, once accepted, becomes a legally binding agreement between the parties. The document must comply with Malaysian banking regulations, particularly the Financial Services Act 2013 and Bank Negara Malaysia guidelines, while also adhering to Shariah principles where applicable for Islamic facilities. It typically follows approval from the bank's credit committee and precedes the execution of detailed security documents. The letter outlines essential terms including facility amount, purpose, interest rates, repayment terms, security requirements, conditions precedent, and key covenants. It serves both conventional and Islamic banking needs and can be used for various financing purposes, from working capital to project financing.
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1. Date and Address Block: Date of the letter and recipient's details including registered address
2. Reference Number: Unique reference number for the facility
3. Salutation: Formal greeting to authorized recipient
4. Subject Line: Clear statement of the purpose - Offer of Loan Facility
5. Introduction: Opening paragraph confirming the bank's approval of the facility
6. Facility Details: Type of facility, amount, purpose, and availability period
7. Interest Rate: Base rate, margin, and effective lending rate
8. Repayment Terms: Payment schedule, method, and frequency of payments
9. Security Requirements: List of required security/collateral
10. Conditions Precedent: Conditions to be fulfilled before drawdown
11. Representations and Warranties: Standard declarations by the borrower
12. Covenants: Ongoing obligations of the borrower
13. Events of Default: Circumstances that trigger default
14. Fees and Charges: All applicable fees, charges, and costs
15. Acceptance Block: Section for borrower's acknowledgment and acceptance
1. Islamic Facility Terms: Required for Shariah-compliant facilities, including specific Islamic structure and requirements
2. Guarantee Requirements: Include when facility requires personal or corporate guarantees
3. Insurance Requirements: Detailed when specific insurance coverage is required
4. Project Specific Conditions: For project financing or specific purpose loans
5. Foreign Exchange Provisions: Required for facilities in foreign currencies
6. Construction Payment Terms: For property under construction financing
7. Multiple Drawdown Conditions: For facilities with multiple tranches or drawdown periods
8. Special Purpose Vehicle Requirements: For facilities requiring establishment of SPV
1. Schedule 1 - Facility Summary: Key terms and conditions in tabular format
2. Schedule 2 - Fees Schedule: Detailed breakdown of all fees and charges
3. Schedule 3 - Conditions Precedent Checklist: List of required documents and conditions
4. Schedule 4 - Drawdown Notice Format: Template for drawdown requests
5. Schedule 5 - Security Documents List: List of required security documents
6. Schedule 6 - Repayment Schedule: Detailed payment schedule if term loan
7. Appendix A - Standard Terms and Conditions: Bank's standard T&Cs incorporated by reference
8. Appendix B - Definition of Financial Covenants: Detailed calculations for financial ratios and covenants
Relevant legal definitions
Clauses
Relevant Industries
Banking and Financial Services
Real Estate and Construction
Manufacturing
Trading and Commerce
Agriculture and Plantations
Technology and Communications
Healthcare and Medical
Education
Hospitality and Tourism
Infrastructure and Transportation
Energy and Utilities
Mining and Resources
Retail and Consumer Goods
Professional Services
Relevant Teams
Legal
Finance
Credit Risk
Compliance
Corporate Banking
Treasury
Credit Administration
Risk Management
Islamic Banking
Operations
Business Development
Corporate Finance
Documentation
Loan Administration
Relevant Roles
Chief Executive Officer
Chief Financial Officer
Finance Director
Treasury Manager
Credit Risk Manager
Relationship Manager
Legal Counsel
Compliance Officer
Credit Analyst
Corporate Banking Manager
Loan Officer
Financial Controller
Company Secretary
Risk Management Officer
Islamic Banking Officer
Credit Administration Manager
Business Development Manager
Corporate Finance Manager
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