Re: What is a bank bill loan?
Posted: Mon Feb 16, 2015 10:53 am
Hello Murri. Welcome to the forums.
Here is what you need to know about a bank bill facility - this is a type of loan that is linked to the cost of funds of the lender. In clearer terms, your loan will have a margin that stands above the Bank Bill Swap Bid Rate (BBSY) at which the lender borrows money.
The size of your loan and the overall risk of your application are taken into consideration when determining your customer margin. The interest rate that you get is rolled over every 30, 60, 90, and 180 days. When rolled over, your interest rate changes back to the current cost of funds plus your margin.
It is recommended that you check out the best available customer margins from a group of different lenders before you try applying for this loan.
If you are operating a medium to large business then this may be a great option for you. Generally, this facility is significantly beneficial if you are borrowing $5 million or more. However, please note that you may be able to get a bank bill loan for an amount as small as $2 million.
The major difference between a normal commercial loan and one with a bank bill facility is that in the normal one, the lender takes the risk of fluctuations in the cost of funds on the money market.
However, if you have a bank bill facility, then you are taking the risk instead of the lender. In effect, this is as if you are going wholesale. The lender charges you a margin for giving you access to this funding, managing the loan, and taking the risk of default.
Cheers,
Otto
Here is what you need to know about a bank bill facility - this is a type of loan that is linked to the cost of funds of the lender. In clearer terms, your loan will have a margin that stands above the Bank Bill Swap Bid Rate (BBSY) at which the lender borrows money.
The size of your loan and the overall risk of your application are taken into consideration when determining your customer margin. The interest rate that you get is rolled over every 30, 60, 90, and 180 days. When rolled over, your interest rate changes back to the current cost of funds plus your margin.
It is recommended that you check out the best available customer margins from a group of different lenders before you try applying for this loan.
If you are operating a medium to large business then this may be a great option for you. Generally, this facility is significantly beneficial if you are borrowing $5 million or more. However, please note that you may be able to get a bank bill loan for an amount as small as $2 million.
The major difference between a normal commercial loan and one with a bank bill facility is that in the normal one, the lender takes the risk of fluctuations in the cost of funds on the money market.
However, if you have a bank bill facility, then you are taking the risk instead of the lender. In effect, this is as if you are going wholesale. The lender charges you a margin for giving you access to this funding, managing the loan, and taking the risk of default.
Cheers,
Otto