A Swingline loan is a short-term loan from financial institutions that allows businesses to access funds to cover their debts. A Swingline loan can be a sub-limit of an existing credit facility or syndicated line of credit, which is financing offered by a group of lenders. Swingline credits usually have short operating terms, which can average between 5 and 15 days. As with any credit facility, there are pros and cons for every credit product. Business leaders need to evaluate the pros and cons in order to determine if a Swingline loan is a viable option. A Swingline loan can take the form of revolving credit, which is a line of credit that the borrower can use and repay repeatedly. Although the loan is usually capped as long as the funds are repaid as agreed, they can be withdrawn in the very short term if necessary. Often, borrowers can receive funds the same day they request them and the repayment and withdrawal cycle can continue as long as all the conditions of the loan are met and both parties choose to keep the line open. Revolving lines of credit, including Swingline loans, may be closed at the discretion of the borrower or lender. Lenders have the option to close any line of credit they deem too risky.
Swingline loans are best suited for use in cases where normal processing delays make other forms of credit impractical. Swingline loans are useful for businesses because they provide money they desperately need fairly quickly. However, swingline loans often have higher interest rates than traditional lines of credit and funds are limited to hedging bonds. Although a Swingline loan, in its capacity, is similar to other lines of credit or on-demand loans, the funds granted by this type of loan should only be used to repay outstanding debts and not for other purposes such as asset acquisition or product research. In addition, this is different from a traditional line of credit that can be used for any purpose, including the purchase of goods or services and the repayment of debt. Swingline loans can be obtained by both businesses and individual borrowers….