Revolving credit for long-term assets

Revolving credit for long term assets is also called “capital investment line of credit” or again “investment credit”. It’s essentially pre-authorized credit that allows you to finance current and future long term assets based on a percentage of their net book value. There are no capital payments, which maximizes cash flow when the company is growing and improves the financial profile of your company.

It cuts down on repetitive loan applications and security acceptance processes while offering flexible terms. Ultimately, revolving credit is an ideal financing solution for companies reinvesting in long term assets in the midst of an important expansion or productivity enhancement phase.

 

Characteristics
Advances Advances are made in pre-established amounts
Advances fluctuate based on the net book value of the long term assets, which is established on a monthly or quarterly basis.
Borrowing power decreases with depreciation expenses but increases with capital procurement
Repayment No fixed repayment terms or current portion of long term debt.
The credit may be converted into a term loan, following prior notification of one year, if the company’s long term asset requirements change or if the financial performance of the borrower warrants it.