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GLOSSARYTERMS AS A CREDIT DESK USES THEM

Accordion facility

What is an accordion facility, and is the extra money committed?

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BY MICHAEL SHANG · SIXTEEN YEARS IN COMMERCIAL BANKING · UPDATED

// THE SHORT ANSWER

An accordion facility is an option in a facility agreement that lets the borrower increase the facility later by up to an agreed amount, by adding commitments from existing or new lenders, without renegotiating the whole agreement. The extra money is not committed: each lender decides whether to take part when the borrower asks, so an accordion is an agreed mechanism, not a promise of funding. Borrowers value it for acquisitions and growth; lenders read it as room for more debt alongside theirs, and usually tie it to conditions such as no default and a leverage test at the time of the increase.

BASIS  Practitioner judgment from sixteen years in commercial banking, set out in How Bankers Think (Highbank Press, 2026). Every borrower on this site is a composite constructed for teaching, not a client. The market is mid-market commercial lending as practised in New Zealand and Australia; where a convention differs elsewhere, the page says so.

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FACILITIES AND THEIR SHAPE

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