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Facility: a very general term for an understanding by which debt is provided. “Facility” rather than “loan” implies an arrangement for drawing and repaying funds in a flexible way, as in a revolving credit facility. This is usually capped at a maximum drawdown figure. Some UK groups rely on an intra-group flexible facility for most or all of their debt.

Facility Fee: a charge made by the lender to the borrower for arranging the loan. Banks charge a range of fees, upfront and annually, to ensure their return on a finance transaction.

Factoring: an arrangement whereby a company sells its invoiced debts, at a discount from their face value, to a specialist debt factor. This gives the company immediate cash and transfers the credit risk from the company to the debt factor.

Financial Instrument: a broad term for the documentation which is evidence of a financial transaction. A legal agreement which may be asset-based or debt-based.

Financial Services Authority (FSA): an independent non-governmental body given statutory powers under the Financial Services and Markets Act 2002, accountable to Treasury Ministers and through them to Parliament. Responsible for overseeing and authorising Recognised Clearing Houses (RCHs), Recognised Investment Exchanges (RIEs) and also firms who carry out investment business. It is the licensing authority allowing Banks to take deposits. The FSA’s objectives are: maintaining market confidence; promoting public awareness of the financial system; consumer protection; and the reduction of financial crime. It was announced in June 2010 that the FSA will be abolished, with most of its financial regulation and licensing powers reverting to the Bank of England.

Fixed Rate Loan: a loan paying interest at a fixed rate for the duration of the loan.

Floating Rate: an interest rate which is periodically varied in line with a benchmark commercial interest rate, such as LIBOR e.g. LIBOR + 2%.

Foreign Bonds: a bond issued by a foreign borrower in a domestic market, someone from outside the country where in the bond is issued and traded. They can be denominated in any currency, but are likely to be a source of funds not in the issuer’s own currency.