Drawdown
Act of accessing available funds from an approved credit facility.
Detailed Description
Drawdown
What is the primary purpose of a drawdown in loans?
The primary purpose of a drawdown is to allow borrowers to access funds from a loan or credit facility as needed, providing flexibility in cash flow management.
What are the main types of drawdown?
The main types of drawdown include revolving drawdown, term loan drawdown, construction drawdown, and equity drawdown.
How does a drawdown differ from loan disbursement?
A drawdown refers to accessing funds from an existing loan after the initial disbursement, while loan disbursement is the initial release of funds when a loan is first approved.
What are some common mistakes borrowers make with drawdowns?
Common mistakes include overestimating needs, ignoring fees, and neglecting repayment plans.
Can drawdowns have tax implications?
Yes, drawdowns can have tax implications, such as the potential deductibility of interest on mortgage drawdowns, while personal loan interest typically is not deductible.