What is the difference between a credit facility and a loan agreement?

What is the difference between a credit facility and a loan agreement Introduction: The Financial Landscape Hello everyone, and welcome to today's video. In the vast realm of finance, various instruments facilitate the flow of funds. Two such instruments, credit facilities and loan agreements, are often encountered. While they may seem similar, they possess unique characteristics that set them apart. Let's dive in! Defining the Terms Before we explore the differences, let's establish the definitions. A credit facility refers to a financial arrangement between a borrower and a lender. It provides the borrower with access to a predetermined amount of funds, which can be drawn upon as needed. On the other hand, a loan agreement is a contract that outlines the terms and conditions of a specific loan. It typically involves a one-time disbursement of funds, with a fixed repayment schedule. Flexibility vs. Certainty