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Revolving Credit Facility
A Revolving Credit Facility (RCF) is a financing solution for the needs of non-bank funders and institutions within a predetermined credit limit, which is secured against assigned receivables. The Facility provides flexibility for the Borrower to access funds when they are needed for efficient cash flow management and to seize growth opportunities with ease.
Financial Flexibility: Understanding the Structure of Revolving Credit Facilities
Conister Bank secures the Facility by taking a debenture over the Borrower, a share charge over its assets for Special Purpose Vehicle (SPV), and completing security with the Revolving Credit Facility (RCF). A collection account is set up for managing customer receipts, with Conister Bank as a signatory.
The Revolving Credit Facility (RCF) requires maintaining a cash reserve of 3% to 10% of the principal balance outstanding to Conister Bank, based on the financial standing of the Borrower/SPV and other factors related to the product and company lifecycle.
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FAQs
What are the costs and expenses associated with Revolving Credit Facility?
The Borrowers are responsible for pre-lend audit fees and legal fees. An arrangement fee of 1% of the facility is payable upon signing, with other fees discussed during the onboarding process.
What are the cash reserve requirements in a Revolving Credit Facility?
The Revolving Credit Facility (RCF) requires maintaining a cash reserve of 3% to 10% of the principal balance outstanding to Conister Bank, based on the financial standing of the Borrower/Special Purpose Vehicle (SPV) and other factors related to the product and company lifecycle.
What financial covenants are involved in a Revolving Credit Facility?
Financial covenants, such as facility security ratio, tangible net worth and interest cover, are set at the outset based on historical and forecasted performance. Conister Bank monitors compliance with these covenants throughout the Facility's life.
What documentation is required for a Revolving Credit Facility?
The Borrowers must provide necessary legal documents, including AML/CDD identification and proof of address. A legal opinion confirming the Special Purpose Vehicle (SPV) documentation's compliance and enforceability is also required.