They’re flexible, non-static business loans. You are also given the option to move your pension pot gradually into an income drawdown which will allow you to take up to a quarter of each amount you move from your tax fee pot and place it into your income drawdown.Ī drawdown facility is a loan that allows you to quickly and easily take out additional advances in the future with little or no paperwork involved. You agree to a set income that you want for an agreed period of time. You then move the rest into funds that allow you to take taxable income at a time that suits you, increasing amounts of people are using this as a regular income. A Flexi-access allows you to take usually up to 25% of your pension tax-free. This offers a hassle-free way to unlock cash from your pension. It allows you to access your pension savings whilst simultaneously reinvesting funds whenever you need them. Just Cashflow, FIBR and iwoca, are some lenders who offer some great revolving credit facilities.Ī Flexi-access drawdown is a drawdown facility that is specifically for pensions. Funds are readily available with an RCF, and like an overdraft, it should be seen as a short-term cash-flow gap. The rolling agreement between bank and business guarantees you access to the facility for a period of usually 12 months. The funds replenish as you make the repayments which is why they are revolving. The primary benefit of a drawdown facility such as a revolving credit facility is its flexibility, as the loan is fitted to your own schedule. The credit has a fixed maximum amount, and the business is free to use, draw from and pay back the money whenever they need it. It does not have a fixed number of payments, and it is therefore a simple line of credit provided to a business from a lender. They have proven to be a popular loan product based on how flexible it is. In a sense, you borrow from a pre-agreed pot which ensures that you can loan money with very little hassle. You will agree with your lender to a funding limit so that prior to this limit you can access the loan flexibly, whenever you may need it. As the name suggests, it is a ‘revolving’ loan that allows for flexible use and repayment. Because you can automatically withdraw the money without having to fill in any loan applications, an overdraft is a drawdown facility.Ī revolving credit facility (RCF) is a loan facility that enables you to withdraw money, use it, repay it, and then withdraw more money. You will agree to an overdraft limit with your bank or lender, and this is known as an arranged overdraft. You pay interest on the outstanding balance of the overdraft loan.Īn overdraft is a form of debt and is repayable on demand. The bank will automatically cover payments that may otherwise be rejected and will allow a customer to continue to pay bills even if there is insufficient money. If your bank account goes below zero, you can borrow money automatically as an extension of your bank account. With an overdraft, you can borrow an amount of money from a lender as part of your bank account. For example, you spend £150, you are now in -£150. If you have no money left in your account but you keep spending, this will take you into your overdraft. An overdraft lets you borrow extra money through your current account. A drawdown facility does come in varying forms, read on to find out more.Īn overdraft is possibly the most common form of lending that is used to ease short-term cash flow issues. This stops you from borrowing a large amount of money that you did not need and therefore ensures you are not paying back unnecessary interest.Īs a borrower, a drawdown facility means that you have access to future parts of the loan, without having to fill out additional paperwork, providing reassurance that a loan is there if you need it. There are various forms and structures of this arrangement that can differ from lender to lender.Ī drawdown loan allows you to borrow a loan in sections, This gives you the benefit of continually taking out parts of the loan, for exactly how much you need, when you need it. A ‘drawdown’ is a concept in finance that allows for access from a credit line during a period of time. They are non-static business loans that allow for flexibility. A drawdown facility is a type of loan that enables you to continually take out further advances with little formality in a fast and hassle-free manner.
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