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Commercial Bill
Commercial Bills can be an excellent answer when you need a significant injection
of cash - above $100,000. Normal terms are from seven to 180 days with a variable
or fixed interest rate. There are two types of bills - Floating Rate Bills & Fixed
Rate Bills. With Floating rates, the drawdown rate and the term to maturity of the
bill are agreed at the time of the drawdown. The interest rate applicable is determined
by the term of the bill. If the period is extended or rolled over, the interest
rate may vary. With Fixed Rate bills, the drawdown rate is fixed for the term of
the facility and your interest rate remains constant for the term of the facility,
which may include several rollovers. With variable rate bills, the interest rate
is fixed for each period.
Borrowing via a Commercial Bill facility offers the flexibility
to adjust the principal amount borrowed each rollover (or interest payment period)
in line with business cash flow requirements, within a specified limit.
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