Commercial Banks — Corporate Credit for Procurement
Corporate loans, revolving credit and syndicated facilities for industrial CAPEX and procurement.
What commercial banks actually lend against
Commercial-bank facilities for industrial buyers fall into three durable buckets. Working-capital lines fund the day-to-day cash conversion cycle (revolvers, overdrafts, receivables and inventory lines). Term loans fund capital expenditure with amortising or bullet structures over 3–7 years. Committed capex facilities let sponsors draw progressively during construction.
Underwriting turns on leverage (net debt / EBITDA), interest coverage (EBITDA / interest), tangible net worth and free cash flow. Where the borrower is a corporate group, the parent guarantee, negative pledge and financial covenants (leverage cap, coverage floor) do most of the credit work — collateral is often a fallback rather than the primary basis of the credit.
Bilateral, club and syndicated structures
A bilateral loan is a one-lender arrangement, fastest to execute and simplest to amend. A club deal is a small group of lenders (typically 3–6) sharing pro-rata risk on standard LMA/APLMA documentation. A syndicated loan is arranged by one or more mandated lead arrangers (MLAs) and distributed to a broader lender group; the borrower deals with an agent bank and a security agent.
Ticket size, complexity and jurisdictional footprint drive the choice. Bilateral lines suit routine working capital. Syndicated facilities are the default above roughly USD 100–150 million or where cross-border security packages, ECA/DFI tranches or intercreditor arrangements are required.
How pricing and covenants are built
Pricing is expressed as reference rate (SOFR, EURIBOR, SONIA or a local overnight rate) plus a margin, with utilisation and commitment fees on undrawn amounts. Margin grids adjust the spread as leverage moves through pre-agreed steps. Upfront fees compensate arrangers and lenders for underwriting and distribution.
Financial covenants — leverage, interest cover, minimum liquidity — are the primary early-warning system. Non-financial covenants (negative pledge, pari passu, restricted payments, permitted disposals) protect the lender group's structural position. Breach normally triggers a cure right, a step-up in margin or, in more severe cases, an event of default.
Instruments compared
| Facility type | Typical use | Tenor | Security |
|---|---|---|---|
| Revolving credit facility (RCF) | General corporate & working capital | 3–5 years | Unsecured / negative pledge |
| Term loan A | CAPEX, refinancing | 5–7 years, amortising | Corporate or asset security |
| Term loan B (institutional) | Leveraged financings | 6–7 years, bullet | Senior secured |
| Bridge facility | Interim funding pre-refinance | 6–18 months | As underlying |
| Uncommitted lines | Short-term liquidity | Overnight – 12 months | Unsecured, cancellable |
Decision guidance
- •Match tenor to asset life — long-life CAPEX belongs in term debt, not revolvers.
- •Model covenant headroom at downside cases, not base case.
- •Diversify lender relationships early — single-bank dependency is a strategic risk.
- •Use short-dated bilateral debt to fund long-dated infrastructure — refinancing risk compounds.
- •Assume documentation is 'standard' — grids, permitted baskets and MFN clauses are heavily negotiated.
- •Reference-rate transition and fallback language in legacy facilities.
- •Sustainability-linked add-ons — pricing ratchets tied to KPI performance.
- •Basel capital treatment shifting appetite for long-tenor unsecured lending.
Related pillars & tools
Instruments that bridge the receivables cycle.
When corporate debt gives way to limited recourse.
How the two channels combine on cross-border trade.
Frequently asked questions
What is the difference between a bilateral and a syndicated loan?+
A bilateral loan is between the borrower and a single lender. A syndicated loan is arranged by one or more mandated lead arrangers and distributed to a group of lenders that share the risk pro-rata under a common facility agreement.
What is a revolving credit facility (RCF)?+
An RCF is a committed line of credit the borrower can draw, repay and re-draw within an agreed limit and tenor. It funds working capital and general corporate purposes; a commitment fee is paid on undrawn amounts.
When do commercial banks stop being the right lender?+
When ticket size, tenor, or jurisdiction risk exceeds appetite — typically above USD 200–300 million single-borrower exposure, tenors beyond 7–10 years, or projects in higher-risk jurisdictions. ECA cover, DFI participation or a project-finance structure then step in.
How is a term sheet negotiated?+
The borrower issues an RFP to a shortlist of relationship banks, receives indicative term sheets, negotiates commercial terms (pricing, tenor, covenants, security), mandates one or more MLAs, and moves to full documentation on LMA/APLMA templates.
Does Global B2B Group recommend specific banks?+
No. We publish educational content on facility structures and pricing mechanics. We do not rank banks and none of our content constitutes a lender recommendation.
Use our neutral, educational tools to identify which channels — commercial, ECA, DFI, project, trade, green — actually fit your project profile.
Continue with our commercial resources
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