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Line Of Credit Letter for Germany

Line Of Credit Letter Template for Germany

A Line of Credit Letter is a formal commitment document issued by a bank or financial institution under German law, establishing the terms and conditions under which a revolving credit facility is made available to a borrower. The document complies with German banking regulations (KWG) and civil code (BGB) requirements, outlining key elements such as the credit limit, interest rates, drawdown conditions, and repayment terms. It serves as a legally binding commitment subject to German jurisdiction, incorporating necessary regulatory disclosures and compliance elements required by German banking laws and EU financial regulations.

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What is a Line Of Credit Letter?

The Line of Credit Letter is a crucial document in German commercial banking practice, used when a financial institution agrees to provide revolving credit facilities to businesses or individuals. It sets out the bank's formal commitment to extend credit up to a specified limit, subject to agreed terms and conditions. The document must comply with German banking regulations (KWG), the Civil Code (BGB), and relevant EU directives incorporated into German law. Typically issued following credit approval and due diligence, the Line of Credit Letter includes essential information about facility limits, interest rates, security requirements, and drawdown conditions. It serves as the primary document evidencing the credit relationship and forms the basis for subsequent drawdowns under the facility.

What sections should be included in a Line Of Credit Letter?

1. Sender Details: Full legal name and address of the lending institution

2. Recipient Details: Full legal name and address of the borrower

3. Reference Line: Letter reference number and date

4. Subject Line: Clear identification as a Line of Credit Letter (Kreditzusage)

5. Greeting: Formal business greeting

6. Introduction: Brief introduction confirming the bank's commitment to provide the credit facility

7. Facility Details: Key terms including credit limit, purpose, availability period, and currency

8. Interest and Fees: Interest rate structure, calculation method, and applicable fees

9. Drawdown Conditions: Process and conditions for accessing the credit line

10. Repayment Terms: Repayment provisions including minimum payments and maturity

11. Security Requirements: Required collateral or security arrangements

12. Key Covenants: Essential financial and operational commitments required from the borrower

13. Closing: Formal closing including acceptance requirements and signature blocks

What sections are optional to include in a Line Of Credit Letter?

1. Reference to Prior Discussions: Include when the letter follows significant negotiations or previous correspondence

2. Special Conditions: Add when there are borrower-specific conditions or requirements

3. Regulatory Disclosures: Include for consumer borrowers or when required by specific regulations

4. Review Process: Add when the facility is subject to periodic review

5. Cross-Default Provisions: Include when the borrower has other facilities with the bank

6. Currency Conversion: Add for facilities available in multiple currencies

What schedules should be included in a Line Of Credit Letter?

1. Schedule 1 - Pricing Schedule: Detailed breakdown of interest rates, margins, and fee structure

2. Schedule 2 - Drawdown Notice Form: Template for borrower to request drawdowns under the facility

3. Schedule 3 - Conditions Precedent: List of documents and conditions required before first drawdown

4. Schedule 4 - Calculation Examples: Examples of interest and fee calculations

5. Appendix A - Required Documentation: List of ongoing documentation requirements

6. Appendix B - Reporting Requirements: Details of required financial and operational reports

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

Germany

Publisher

Ƶ

Document Type

Letter of Credit

Cost

Free to use
Relevant legal definitions



































Clauses




























Relevant Industries

Banking & Financial Services

Corporate Lending

Commercial Banking

Investment Banking

Small and Medium Enterprises

Manufacturing

Retail

Real Estate

Technology

Healthcare

Construction

Trading & Commerce

Agriculture

Energy

Transportation & Logistics

Relevant Teams

Legal

Finance

Treasury

Credit Risk

Compliance

Corporate Banking

Operations

Risk Management

Account Management

Credit Administration

Relevant Roles

Chief Financial Officer

Treasury Manager

Finance Director

Credit Officer

Relationship Manager

Risk Manager

Legal Counsel

Compliance Officer

Corporate Banking Manager

Financial Controller

Credit Analyst

Banking Operations Manager

Account Manager

Treasury Analyst

Finance Manager

Industries







Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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