Uncommitted Facility

An uncommitted facility is an agreement between a lender and a borrower where the lender agrees to make short-term funding available to the borrower. This is unlike a committed facility that involves clearly defined terms and conditions set forth by the lending institution and imposed on the borrower. Uncommitted facilities are used to finance seasonal or temporary needs of businesses with fluctuating revenues, such as paying creditors to earn trade discounts, single or one-off transactions, and meeting payroll obligations.