What are Corporate Credit Cards? – Different Types of Cards
February 12, 2025
When the word bankruptcy is used, the immediate image conjured is that of a company that is trying hard to stay afloat. However, external parties such as creditors are pushing for the immediate repayment of debts causing the company to become insolvent. The average person thinks of bankruptcy as an auction type event wherein the […]
The Silicon Valley Bank crisis has prompted the Federal Reserve to evaluate its emergency funding program. The original emergency funding program i.e. the discount window was obviously not sufficient to provide funding to failing banks such as the Silicon Valley Bank. This is the reason that the bank ended up failing. The Fed felt the […]
In the previous couple of articles, we have tried to understand what salary caps are. We also know the different types of salary caps, where they are followed across the world, their objectives as well as their advantages. It needs to be understood that the salary cap system is not free from its flaws. In […]
Last month Donald Trump fueled a debate when he called the Fed “crazy.” Political accusations started flying all across the media. However, it raised a very important point. The world realized that Donald Trump is not in control of the Federal Reserve which is the central bank of the United States. To the financially savvy, […]
Credit enhancement refers to the artificial restructuring of credit products which results in the improvement of its credit rating. In simple words, if a bond being issued by an entity has credit rating BB+, it can use credit enhancement techniques to increase its credit rating to AA+ or so. There are obvious benefits of using […]
In the previous articles, we have seen the various non-lending-related commercial banking products which are offered by banks. However, at the end of the day, a commercial bank is a bank. This means that its main business is still to lend money. When it comes to commercial banking, the loan products are quite different from the ones used in retail banking.
In this article, we will have a closer look at the concept of Swingline loans. We will also understand how these loans are different from other loan products offered by commercial banks.
For instance, when a company takes an overdraft from a commercial bank, they can utilize the cash as per their requirements. They can buy new assets with it if they want. They could even host a marketing event with the money if that is what the company wanted!
However, when it comes to Swingline loans, they are given to the borrower on the clear understanding that this money will only be used to repay old debt. In many cases, banks do not even disburse the loan to the borrowing corporation. Instead, they directly pay off their creditors. Hence, it can be said that the terms and conditions of a Swingline loan are more restrictive as compared to other loans provided by commercial banks.
Swingline loans are widely used by businesses that are facing a cash crunch. However, they are not the only option that is available to a business. Swingline loans are inherently competing with several other banking products provided by the commercial bank itself. Some of them have been listed below:
The bottom line is that Swingline loans form an important part of the overall commercial banking portfolio. There are several pros and cons of a Swingline loan which will be discussed in a later article.
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