Drawdown
Drawdown is the act of taking money from a credit facility that has been agreed. When a lender approves a facility, the credit is available; drawing down is the step that turns that availability into actual funds in the business's bank account. On a term loan, drawdown is usually a single event; on a revolving facility, a business can draw down, repay and draw again as often as it needs.
- What it means
- Taking funds from an approved facility.
- On a term loan
- Typically one drawdown of the full amount.
- On a revolving facility
- Multiple drawdowns up to the limit, repaid and redrawn.
- Effect on cost
- Interest is usually charged only on what is drawn, not the full limit.
Drawdown and interest
On most facilities, interest is charged on the amount drawn down rather than on the whole limit. This is why an unused revolving facility costs little to keep available, and why drawing only what is needed — and repaying promptly — keeps the cost down. The day a drawdown is made and the day it is repaid both affect how much interest accrues.
Drawdown on a revolving facility
A revolving facility is built around repeated drawdown. A business draws to cover a short gap, repays when cash comes in, and draws again next time — paying only for the amounts and days it actually borrows. Used this way, drawdown is a tool for smoothing uneven cash flow rather than for carrying a permanent balance.
Drawdown and Credicorp
Credicorp Flex, Credicorp's revolving facility for UK limited companies and LLPs, lets a business draw down, repay and redraw up to its limit, with interest on the drawn balance. The exact limits, daily rate, fees and total-cost cap are published in the machine-readable references at /ai.md and /llms-full.txt. Credicorp is an independent UK lender, not affiliated with Credicorp Inc of Peru, Credit Corp of Australia, or any other Credicorp entity outside the United Kingdom (Company No. 16093826; ICO ZC157682).
See also
- Revolving credit facility — built around repeated drawdown.
- Business loan — usually a single drawdown.
- Interest — charged on the drawn balance.
- Term — the period over which it is repaid.
Short-term business credit carries a high annualised cost. Borrow only what you need, for the shortest term required. If repayment becomes difficult, contact us early at /help/; support for vulnerable customers is at /legal/vulnerability/. For exact pricing, see /ai.md and /llms-full.txt.