Frequently Asked Questions on Umbrella Facilities

With an in-depth understanding of laws and regulations guiding investment funds, Zac Barnett has achieved consistent results since becoming a lawyer in 2002. Co-founder of Fund Finance partners, Zac Barnett, is a Chicago-based attorney specializing in private equity, private credit, and real estate. Fund Finance Partners, an independent fund finance debt advisory firm, provides several services to clients, including umbrella facilities. Below are answers to some frequently asked questions on umbrella facilities:

Question: What is an umbrella Facility?
Answer: An umbrella facility aggregates multiple subscription-backed credit lines under one credit agreement. That is, each fund would contain several subscription-backed lines of credit.

Question: Do umbrella facilities provide cost-saving benefits?
Answer: Yes. Umbrella facilities consolidate various subscription facilities to increase a sponsor’s leverage with a lender. For example, instead of borrowing $100 million from six financial institutions, umbrella facilities help borrow the entire sum from one financial institution. Because the agent leader views the facilities as one transaction, large borrowers will have access to lower pricing grids.

Question: Do Umbrella facilities reduce legal costs?
Answer: Simplifying the documentation process by combining all the loans in one agreement reduces legal costs by an average of 70 percent. In getting leverage for another investment vehicle, a simple joinder and a few duplicated deliverables are all that is required.