Facility Sharing

Facility Sharing is an arrangement in international trade finance where two or more affiliated enterprises (such as a parent and subsidiary, or sister companies) jointly use the same bank credit facility. It is common among group companies, where the parent company applies to the bank for a unified credit line, and subsidiaries can separately conduct business such as issuing letters of credit, negotiating bills, or taking loans within that line. Use cases include: the group centrally managing financing costs, subsidiaries with insufficient creditworthiness needing to leverage the parent company's facility, and banks granting credit to the group as a whole. Precautions: it is necessary to clarify each member enterprise's usage limit, guarantee method, and joint liability; banks usually require signing a facility sharing agreement and may set sub-limits for individual members. Difference from 'facility transfer': sharing means multiple parties simultaneously use the same facility, while transfer means the assignment of ownership or usage rights of the facility; it is different from 'back-to-back letters of credit,' which involve two separate letters of credit. Foreign trade practitioners should pay attention to the risk of fund allocation under facility sharing to avoid default caused by overuse.