Credit Facilities

A credit facility is a grouping of multiple credit products that a customer has arranged with a financial institution under a single credit limit. Financial institutions can offer companies a credit limit for the company as a whole, and the company can then take on different loan products without the need for separate risk assessments. This simplifies access to funds for companies and greatly reduces time-to-cash. Credit facilities also create operational efficiencies for the financial institution, because individual loans no longer need separate risk assessments.

FintechOS Loan Management allows financial institutions to create credit facility agreements for their customers based on approvals.

Credit Facility Implementation Notes

  • The credit facility approval is made according to the specifications of the financial institution set during the implementation process.

Business Logic

Let's say a financial institution approves a credit facility for a group or a customer up to EUR 100.000, to be used by the credit facility participants among various currencies:

  • guarantees allowed in EUR and USD;

  • term loans allowed in EUR and GBP;

  • overdrafts allowed in EUR.

First, an agreement is made between a financial institution and a customer (total exposure limit). This limit is used while creating the credit facility, making sure that the credit facility limit amount does not exceed the total exposure limit of the customer. The approval can be revolving or non-revolving, thus both limit and facility have the same nature.

The credit facility holds details about:

  • Allowed banking products, with their preset currency;

  • Allowed customers, if the facility is granted for a specific group of customers;

  • Covenants, if needed;

  • Prices:

    • Unused amount fee, as a percentage to be applied to daily unused amount. The fee is collected from current/ servicing account with a given frequency/ periodicity;

    • Interest and commission related elements, for negotiable product costs.

Loan contracts are entered whenever the customer asks for disbursements, according to the credit facility setup.

Managing Credit Facilities

To manage credit facilities:

  1. In FintechOS Portal, click the main menu icon and expand the Loan Management Operational menu.

  2. Click Credit Facility menu item to open the Credit Facility page.

On the Credit Facility page, you can create a new credit facility, search, edit, or delete existing ones in Draft status.