A type of facility included in loan agreements that permits a borrower to refinance loans either with new tranches under the loan documents or additional debt outside of the loan agreement that either shares pari passu in the loan document collateral or is secured by a second lien (usually a silent second lien) on that collateral. The advantage to the borrower of having a refinancing facility is that it can refinance the loans with debt that is outside of the loan agreement, yet shares in the collateral with the lenders, without requiring the consent of the lenders.

While incremental facilities are often subject to most favored nations provisions and leverage conditions, refinancing facilities typically have neither requirement.

For more information on refinancing facilities, see Practice Note, Lending: Overview: Refinancing Facility.