Document background
The Facility Letter is a crucial banking document used in New Zealand's financial services sector to formalize lending arrangements between financial institutions and borrowers. It is typically issued after initial credit approval but before the disbursement of funds, serving as both an offer letter and, upon acceptance, a binding contract. The document must align with New Zealand's regulatory framework, including banking regulations and consumer protection laws. A Facility Letter includes essential information such as the facility amount, purpose, interest rates, fees, repayment terms, security requirements, conditions precedent, and key undertakings. It's particularly important in commercial lending, property finance, and business banking, where it provides clarity and certainty to all parties while ensuring compliance with legal and regulatory requirements. The document can be used for various types of credit facilities, from simple term loans to complex revolving credit facilities.
