What This Revolving Line of Credit Agreement Template Covers

This revolving line of credit agreement template provides a comprehensive framework for businesses seeking to establish a credit facility with a lender. It includes essential clauses such as the credit limit, interest rate, draws and repayments, events of default, and termination provisions. Each section is designed to protect both the lender and the borrower while ensuring compliance with commercial lending laws.

When to Use a Revolving Credit Contract

Consider utilizing this revolving credit contract when your business requires flexible funding options to manage cash flow, finance inventory purchases, or handle unexpected expenses. It is particularly beneficial for small businesses looking to maintain operational liquidity without the commitment of a traditional loan. Additionally, this agreement is ideal for businesses that anticipate fluctuating financial needs over time.

What's Included in This Business Credit Agreement Template

• Parties: Clearly identifies the lender and borrower, including their names and addresses, to establish legal responsibility.
• Credit Limit: Specifies the maximum amount of credit available to the borrower, ensuring clarity on borrowing capacity.
• Interest Rate: Outlines the interest rate applicable to the drawn amounts, essential for understanding repayment obligations.
• Draws and Repayments: Details the process for accessing funds and the schedule for repayments, providing a clear framework for financial management.
• Events of Default: Defines circumstances that may trigger default, protecting the lender's interests and outlining potential repercussions.
• Termination: Explains the conditions under which the agreement may be terminated, ensuring both parties understand their rights.

Key Provisions of a Commercial Credit Agreement

• Credit Limit Clause: This clause is crucial as it sets the boundaries for borrowing, preventing overextension of credit.
• Interest Rate Clause: Establishing a clear interest rate helps both parties understand the cost of borrowing and aids in financial planning.
• Events of Default Clause: This provision protects the lender by outlining specific actions or inactions that could lead to default, ensuring accountability.
• Termination Clause: Clearly defined termination conditions help both parties navigate the end of the agreement smoothly, reducing potential disputes.

Disclaimer: This template is for informational purposes only and does not constitute legal advice.