A Credit Facility Letter is a crucial document in Philippine banking practice, used when a financial institution approves a credit facility for a borrower following a successful credit application and assessment. The document serves multiple purposes: it formally communicates the approval of credit, specifies all material terms and conditions of the facility, ensures compliance with Philippine banking regulations (including the General Banking Law and Truth in Lending Act), and becomes a binding agreement upon acceptance. The letter must incorporate mandatory regulatory disclosures, reflect current Bangko Sentral ng Pilipinas guidelines on interest rates and fees, and include appropriate risk management provisions. It's typically issued after internal credit committee approval but before the disbursement of funds, forming part of the essential documentation for any credit relationship in the Philippine banking sector.
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1. Letter Header: Bank's letterhead, date, reference number, and recipient's details
2. Salutation: Formal greeting to the borrower
3. Facility Approval: Clear statement of credit facility approval and reference to the borrower's application
4. Facility Type and Amount: Specification of the type of credit facility and the approved amount
5. Key Terms and Conditions: Essential terms including interest rate, tenure, repayment schedule, and security requirements
6. Fees and Charges: Detailed breakdown of all applicable fees, charges, and commissions
7. Conditions Precedent: List of conditions that must be fulfilled before the facility becomes available
8. Representations and Covenants: Key promises and ongoing obligations of the borrower
9. Events of Default: Circumstances that would constitute default and their consequences
10. Acceptance Instructions: Instructions for accepting the facility offer and deadline for acceptance
11. Closing and Signature: Formal closing, bank authorized signatories section
1. Purpose of Facility: Include when the facility is restricted to specific uses or projects
2. Security Details: Required when the facility is secured by collateral or guarantees
3. Insurance Requirements: Include when insurance coverage is required for the facility
4. Special Conditions: Add when there are industry-specific or borrower-specific conditions
5. Facility Review: Include for facilities subject to periodic review
6. Cross-Default Provisions: Required when the borrower has multiple facilities with the bank
7. Foreign Exchange Provisions: Include for facilities involving foreign currency
1. Schedule 1 - Facility Terms Summary: Detailed breakdown of all facility terms in tabular format
2. Schedule 2 - Fee Schedule: Comprehensive list of all applicable fees and charges
3. Schedule 3 - Conditions Precedent Checklist: Detailed list of required documents and conditions
4. Schedule 4 - Security Documents List: List of required security documents and supporting materials
5. Appendix A - Drawdown Notice Format: Standard format for requesting drawdown under the facility
6. Appendix B - Compliance Certificate Format: Template for periodic compliance certification
7. Appendix C - Standard Terms and Conditions: Bank's standard terms and conditions referenced in the letter
Relevant legal definitions
Clauses
Relevant Industries
Banking and Financial Services
Corporate Lending
Retail Banking
Small and Medium Enterprises
Real Estate and Construction
Manufacturing
Trading and Distribution
Agriculture
Technology and Telecommunications
Healthcare
Education
Infrastructure
Energy and Utilities
Transportation and Logistics
Relevant Teams
Legal
Credit Risk
Compliance
Corporate Banking
Retail Banking
Operations
Treasury
Finance
Risk Management
Commercial Banking
Credit Administration
Documentation
Relationship Management
Internal Control
Relevant Roles
Credit Officer
Relationship Manager
Credit Risk Manager
Legal Counsel
Compliance Officer
Chief Financial Officer
Treasury Manager
Corporate Secretary
Financial Controller
Credit Analyst
Branch Manager
Account Officer
Risk Officer
Managing Director
Finance Director
Chief Executive Officer
Operations Manager
Commercial Director
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