Cover any delays between paying suppliers (accounts payable) and receiving payments from customers (accounts receivable).
Quickly purchase large volumes of stock and raw materials to meet demand or take advantage of supplier discounts.
Ensure timely payment of critical running expenses, such as payroll, rent, and utility bills.
Fund increased inventory and staffing needs during peak sales periods, repaying when seasonal revenue arrives.
Act as an immediate financial buffer for emergency equipment repairs or unforeseen tax obligations.
Provide fast, on-demand capital to invest in sudden growth chances without a new loan application.
| Revolving Credit Facilities | Term Loans |
|---|---|---|
Funding structure | Credit line - borrower can draw, repay and redraw money up to a set limit | Lump sum - borrower receives the entire amount upfront |
Flexibility and access | Flexible and reusable - money is available on demand, and the facility replenishes upon repayment | Fixed and certain - you receive the full defined capital amount upfront for immediate use |
Interest | You only pay interest on the portion of the loan you use | You pay interest on the full loan amount |
Repayment | Variable - often requires minimum payments, allowing you to manage cash flow fluctuations | Predictable - the loan and interest are repaid through a set schedule of fixed instalments |
Early repayments | Typically no penalty, as repaying frees up the credit line for future use | There may be a prepayment penalty if the loan is paid off early |
Associated fees | There may be an annual fee or a non-utilisation fee on any unused credit | after the initial arrangement and closing fees, there are typically no fees on the unused credit |
Ideal for | Working capital, covering short-term cash flow gaps and managing seasonal or unexpected expenses | Major capital expenditures, acquisitions or large projects |
Aaron MoOng Ong Buns