Swingline Loan

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Definition of 'Swingline Loan'

A swingline loan is a short-term, revolving line of credit that is typically used to bridge the gap between when a company needs cash and when it receives its cash flow. Swingline loans are often used to cover seasonal expenses, such as payroll or inventory, or to finance a company's growth.

Swingline loans are typically offered by banks and other financial institutions. The interest rate on a swingline loan is typically based on the prime rate, plus a margin. The margin is the amount of interest that the lender charges over the prime rate.

The term of a swingline loan can vary, but it is typically for a period of one year or less. Swingline loans can be renewed, but the lender may require the borrower to provide additional collateral or to meet other conditions in order to renew the loan.

Swingline loans are a relatively inexpensive way for companies to access short-term cash. However, it is important to note that swingline loans are not secured, which means that the lender has no collateral to fall back on if the borrower defaults on the loan. As a result, swingline loans are considered to be a riskier investment for lenders than secured loans.

Swingline loans can be a valuable tool for companies that need access to short-term cash. However, it is important to carefully consider the terms of the loan before borrowing, as swingline loans can be expensive and risky.

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