A credit line agreement is a document that can provide flexibility between a lender and a borrower.

It can have a variety of terms and conditions within the document, but the main purpose is to provide a lending facility from a creditor to a debtor so that funds can be advanced on a periodic basis, often at the request of the debtor, so that further documentation isn’t required every time the creditor provides further loan money.

The credit line agreement would normally detail a credit limit, an interest rate applicable to the loan outstanding, an interest payment date (if required) and details of when funds can be requested and when they need to be repaid by. Usually it is sensible to also include within the credit line agreement the right for the creditor to require the debtor to enter into a General Security Agreement to provide security for the money they are lending.

If you are thinking of having inter-entity lending within your structure, then the use of a credit line agreement to formalise the details of that lending is sensible. Feel free to get in touch with one of us at Prudentia Law to assist with this.