A facility is a committed credit arrangement under which a lender advances funds up to a limit against a defined pool of assets. For legal assets it is usually governed by a borrowing base, eligibility criteria and reporting covenants.
Facilities let a funder or a firm draw capital as needed instead of raising it deal by deal. The lender sets an advance rate, eligibility rules and concentration limits, and the borrower reports on the pool at agreed intervals.
The structure is only as strong as the measurement behind it. If the collateral's value cannot be re-derived as matters move, the borrowing base becomes a formula applied to stale inputs.
A facility is not a commitment to fund any particular matter. It is a framework within which advances are made against pools that meet the stated criteria.
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