That's right.
- An Overdraft assists with short-term cash flow needs and creates a safety net for businesses by allowing them to withdraw extra funds up to their approved limit. It is an ongoing line of credit with no set repayments. This means minimum interest payments can be made on a regular basis and the rest can be repaid later, when the business has more cash flow.
- Pricing for an Overdraft will include an establishment fee, line fee and an interest rate to cover the cost of funds, operating costs, capital charges, expected loss and risk adjusted returns.
Overdraft
Rate Build-Up
Rate
Not quite.
A Better Business Loan is a term loan with a set repayment structure and as funds are not easily accessible, it is not the ideal solution for this scenario.
Not quite.
A Bank Guarantee is not appropriate in this scenario as it is a contingent liability. It is used when a borrower needs to guarantee certain terms to a third party. A Bank Guarantee is called upon by the favouree when the borrower fails to meet the agreed terms.
