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Pricing a Revolving Line of Credit

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Revolving lines of credit are intended to be repeatedly drawn and repaid over a term. The borrower can owe up to a ceiling at any given time, and as they pay that back, they can borrow back up to the ceiling. Unlike Scheduled Draws and Repays, there is no set schedule for the borrower to draw or repay funds. PrecisionLender allows you to choose "LOC" to set Line of Credit as your payment type.

 

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When Line of Credit is selected as the Payment Type, additional fields unique to Line of Credit may be entered. These are:

  • Commitment
    • Commitment - the amount of credit that has been made available to the borrower
    • Utilization - the amount of credit that the lender expects the borrower to use
      • If entered as a percentage, then the dollar amount will automatically update
      • If entered as a dollar amount, then the percentage will automatically update
    • Initial Balance - the amount that the borrower is drawing at the beginning of the term
      • If you need to "lock" the initial balance so that it doesn't change when you enter your commitment or utilization, click the lock icon next to "Initial Balance" (The lock icon is located next to the Initial Balance field).
    • Create Commitment Schedule
      • This allows you to add additional commitment amounts at various months along the duration of the loan. 
      • If enabled, lenders will also be able to define the portion of the commitment that is expected to be available to the borrower. To enable this functionality, see Setting Up Commercial Loan Products.  

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  • Fees on Unused LOC
    • A percentage of the unused amount of commitment that will be added to the fees can be configured as a default for this payment type in the Administration Section.
    • This fee can be expressed either as a percentage or as a flat dollar amount and is charged annually.

The Fees section also shows fees for unused portions of lines of credit.

For additional information on the pricing calculations involved with Lines of Credit, visit the following:

 

 

 

 

 

 

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