A financial arrangement between a borrower and lender that provides the borrower access to a specific amount of credit over a set period. The facility is typically on a revolving basis and includes a collateral pledge arrangement in which the equity of the borrower company and/or its assets are pledged as collateral.
A private lender may establish a credit facility with a real estate developer, allowing the developer to draw on the funds as needed to finance various projects, such as renovations or new constructions, while only paying interest on the drawn amounts.