A loan is often a more rigid agreement between a bank and a borrower. The borrower usually has to apply for a loan for a specific reason, citing how the funds will be used and being charged an interest rate related to that given level of risk. Traditional loans award funds to the borrower upfront; the borrower is then assessed an amortization schedule of payments to return the principal and interest charges back to the lender. A credit facility is more flexible, as the agreement allows a borrower to take on debt only when it needs. In addition, the borrower often has more flexibility around how much it can take and the reasons to use debt. While a loan burdens a company with debt, a credit facility allows a company to be burdened with debt should it need additional financing in the future.