Club facility
What is a club facility, and how does it differ from a syndicated loan?
ONE OF 80 TERMS · FREE · NO SIGNUP
BY MICHAEL SHANG · SIXTEEN YEARS IN COMMERCIAL BANKING · UPDATED
// THE SHORT ANSWER
A club facility is a loan shared by a small group of banks, usually each with its own relationship with the borrower, on one set of terms negotiated together. A syndicated loan is the larger version, arranged by lead banks and sold down to a wider group, with an agent bank administering it. In both, each bank holds a share and votes on consents and waivers, so one lender's view counts only as far as it persuades the others.
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.
// WORKED IN
// NEXT TO IT
- 5 Cs of credit
- Cash conversion cycle
- Working capital facility
- Quality of earnings
- Debtor days
- Borrowing base
- Covenant headroom
- Second way out
- Personal guarantee release
- Customer concentration
- Multi-currency facility
- Bankability
- Commitment fee
- Clean-down
- Self-liquidating
- Balloon payment
- Amortisation
- Debt service cover ratio (DSCR)
- Interest cover ratio
- Debt to EBITDA (leverage)
- Dilution (receivables)
- Advance rate
- Hardcore (overdraft)
- Loan to cost (LTC)
- Presales
- Standstill agreement
- Break cost
- Expected loss
- Dividend payout ratio
- Debt per kgMS
- Fixed charge cover ratio (FCCR)
- Global cash flow
- Interest reserve
- General security agreement (GSA)
- Negative pledge
- Condition precedent (CP)
- Event of default
- Covenant waiver
- Reservation of rights
- Watch list
- Risk grade
- Loan loss provision
- Going concern
- Management accounts
- Term-out
- Subordination
- Intercreditor agreement
- Unsecured lending
- Loan to value ratio (LVR)
- Forced-sale value
- Related-party transactions
- Capitalised costs
- Quantity surveyor (QS)
- Retention (construction)
- Peak debt
- Cash sweep
- Finance lease
- Adjusted EBITDA
- Interest rate swap
- Forward exchange contract
- Maturity transformation
- Risk-weighted assets
- Net interest margin
- Credit cycle
- Yield curve
- Transaction exposure
- Information barrier
- Conflict of interest
- Material non-public information
- Tipping off
- Suitability
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