Request Proposal for Credit Facility Template

In plain language: Identifies the company, states that the letter is a formal RFP, and summarizes the type and size of facility being sought.

Common mistake: Opening with company history rather than the facility ask. Lenders want to know the size and type of facility in the first paragraph — burying it further down causes proposals to miss key parameters.

In plain language: Provides a brief description of the business, its industry, years in operation, and headline financial metrics that establish creditworthiness.

Common mistake: Providing unaudited or internally prepared financials without labeling them as such. Lenders who discover the basis of preparation later in diligence lose confidence in the borrower's transparency.

In plain language: Specifies whether the facility is a revolving line, term loan, or combination, the maximum commitment amount, and the desired draw structure.

Common mistake: Stating only a total commitment amount without specifying whether the facility is revolving or amortizing. This forces lenders to make incompatible pricing assumptions, producing proposals that are impossible to compare.

In plain language: Explains exactly how the borrowed funds will be used — working capital, capital expenditure, acquisition financing, or refinancing — so lenders can assess the risk profile.

Common mistake: Describing the use of proceeds as 'general business purposes' without further detail. Lenders price risk based on how funds are deployed — vague descriptions result in conservative (i.e., more expensive) pricing assumptions.

In plain language: Describes the collateral the company is prepared to offer, including the assets involved, their approximate value, and any existing encumbrances.

Common mistake: Offering security without disclosing existing charges or liens against the same assets. Lenders will discover encumbrances in title and PPSA/UCC searches — undisclosed prior charges delay or derail the process.

In plain language: Indicates the covenants the company is willing to accept — or proposes to negotiate — such as minimum DSCR, maximum leverage ratio, and reporting obligations.

Common mistake: Proposing no covenants at all in an attempt to appear low-risk. Lenders view the absence of any proposed covenants as a negotiating tactic and respond with tighter terms — proposing reasonable starting points demonstrates financial maturity.

In plain language: Instructs lenders on exactly what their proposal must contain — pricing, fees, term sheet, and any credit approval conditionality — so responses are comparable.

Common mistake: Not requiring lenders to disclose credit approval conditionality. A proposal that looks attractive may be subject to credit committee approval that significantly changes the terms — requiring disclosure upfront avoids late-stage surprises.

In plain language: States the factors on which proposals will be scored — not just price — so lenders understand that relationship, speed, and flexibility also matter.

Common mistake: Stating that the lowest price wins without listing other criteria. This triggers a race to the bottom on pricing, sometimes attracting lenders who compensate with restrictive covenants or onerous fees disclosed only in the term sheet.

In plain language: Sets a firm deadline for proposal submission, names the contact to whom proposals should be sent, and outlines the next steps after the deadline.

Common mistake: Omitting a mandate and close target date. Without a stated timeline, lenders treat the process as non-urgent and deprioritize their response — publishing a close target creates competitive pressure to respond promptly.

In plain language: Notifies lenders that the information in the RFP is confidential, that the company is not obligated to accept any proposal, and that the RFP does not constitute a binding commitment.

Common mistake: Omitting the non-binding disclaimer entirely. Without it, a lender that incurs costs preparing a detailed proposal may assert reliance-based claims if the process is terminated — even where no contract was formed.

A request for proposal (RFP) for a credit facility is a formal letter a company sends to one or more lenders inviting them to submit competing proposals for a credit line or loan. It describes the borrower's business and financials, the type and size of facility required, the proposed security package, and the criteria and deadline for proposal submission. Running an RFP process creates competitive tension among lenders and typically results in better pricing and terms than negotiating with a single bank.

Use an RFP when you want to compare proposals from multiple lenders rather than accepting the first offer from your relationship bank. It is particularly effective when refinancing an existing facility at maturity, when your credit profile has improved and you believe you can command better terms, or when the facility is large enough ($1M or more) that the time investment in a competitive process is justified by potential interest savings.

Three to five lenders is the typical range for a mid-market credit RFP. Fewer than three removes the competitive dynamic; more than five creates significant administrative burden and signals to lenders that the process lacks seriousness. Include your primary relationship bank, at least one competing bank, and consider a non-bank lender (credit fund or specialty finance company) to benchmark the full market.

At minimum: audited financial statements for the past two to three years, current year-to-date management accounts, an organizational chart showing the legal structure of the borrower and any guarantors, a schedule of existing debt and security, and any relevant asset appraisals. For asset-based facilities, include a current accounts-receivable aging report and inventory schedule. The more complete the package, the faster lenders can issue a substantive proposal.

No — a properly drafted RFP explicitly states that the company is not obligated to accept any proposal and reserves the right to terminate the process at any time without liability. This non-binding disclaimer is standard and expected by lenders. You are free to negotiate with multiple lenders simultaneously, reject all proposals, or abandon the process if market terms do not meet your requirements.

A typical timeline runs 6 to 10 weeks from RFP dispatch to facility close. Allow 10 to 15 business days for lenders to submit proposals, 1 to 2 weeks for shortlisting and lender meetings, 1 week to issue a mandate letter to the selected lender, and 3 to 4 weeks for legal documentation, due diligence, and funding. Complex or large facilities may take 12 to 16 weeks.

An RFP is sent by the borrower to invite lenders to compete — the borrower sets the terms of the process and evaluates competing offers. A loan proposal is typically prepared by the borrower (or a lender) to present a specific financing request to a single institution. An RFP creates a competitive market process; a loan proposal is a direct application or pitch to one lender.

For facilities above $5 million or in specialized sectors (real estate, project finance, leveraged buyouts), engaging a financial advisor or arranger adds value by identifying the right lender universe, managing the process, and negotiating term sheet details. For smaller facilities, a well-prepared RFP template combined with direct lender relationships is typically sufficient and avoids the 0.5–1% arrangement fee a third-party advisor charges.

Create a comparison table with one row per lender and one column per key term: interest rate, reference rate, commitment fee, arrangement fee, key covenants, security requirements, and approval conditionality. Shortlist the top two or three lenders for follow-up meetings, negotiate on the points where proposals differ most, and then issue a mandate letter to your selected lender before beginning legal documentation.