Overdrafts/Lines of Credit
May 19, 2016
Flexible lending facilities where the loan proceeds are available ‘at call’. You may not require all of the loan processes in one lump sum, but provide smaller amounts at varying times. That may be as a result of the peaks and troughs in business activity and/or how often your debtors pay.
The loan process can be drawn down, utilised, paid back over and over again. You only pay interest on the facility you are using at any point in time. Some lenders do charge an unused limit fee.
A lending facility catering for short term requirements which the lender will want to see drawn down and paid back over and over. If the debt becomes “hard core” it should be transferred to a term loan.
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