Working Capital
A Working Capital facility or business overdraft facility is a line of credit that allows a business to draw down on funds up to a maximum agreed amount.
An overdraft becomes available when you spend more than the balance in your business account. The funds can be used for any business purpose and comes in handy when unexpected expenses occur.
There are different types of working capital facilities which differ slightly in their terms and the security that they use to guarantee the line of credit. As with any loan, the amount you spend on the overdraft is a debt you must repay, and interest is charged until it is fully repaid. Interest is only charged on the balance outstanding at any point in time.
Traditionally, banks offer overdraft facilities however these loans typically require security in the form of residential or commercial properties, cash or assets held with the bank. Magnolia Lane can organise your business an unsecured overdraft facility which means that you don’t have to use any other property or assets as security.
Key Benefits of a Working Capital
Funds can be used for any business purpose
Rainy day funds available for unexpected expenses
No property, cash or asset security required
Only pay interest on the amount you have drawn down