Discover how businesses can effectively manage cash flow fluctuations with the Dropline Overdraft. This flexible financial solution offers a decreasing credit limit, lower interest rates, and acts as a financial buffer for unforeseen expenses.

1. Dropline Overdraft -
Flexible Financial
Solution for
Businesses

2. Definition:
A Dropline Overdraft is a hybrid credit facility combining the features of a term loan and an
overdraft. It is granted against collateral, often property or fixed deposits, with a limit that
drops over the pre-set tenure of the facility.

3. How it Works
Visual Diagram: A descending line graph showcasing the gradual decrease in the overdraft limit
over time.
Example: "Starting limit of $100,000 reducing by $10,000 each month.

4. Key Features:
Flexibility: Withdraw funds as needed up to the available limit.
Reducing Limit: Encourages better financial planning and discipline.
Cost-Effective: Lower interest rates compared to unsecured borrowing options.

5. Benefits:
Cash Flow Management: Ideal for managing working capital and cash flow fluctuations.
Interest Savings: Interest charged only on utilized funds, not on the entire limit.
Emergency Buffer: Acts as a financial buffer for unforeseen business expenses.

6. Ideal for
Seasonal Businesses: Those that experience considerable variability in cash flow.
Project-Based Operations: Companies that have project-specific funding needs.

7. Comparison with Regular Overdraft:
Interest Rates: Often lower in Dropline Overdraft facilities.
Limit Tenure: Fixed, reducing limit as opposed to a constant limit in traditional overdrafts.
Repayment Structure: Flexible repayments with the objective of decreasing credit exposure
over time.

8. Possible Drawbacks
Interest Accumulation: If not strategically managed, the facility can accumulate significant
interest.
Debt Trap Risk: Mismanagement can lead to a cycle of debt, particularly if the business income
does not meet projections.

9. Case Study/Example:
XYZ Traders accessed a dropline overdraft of $50,000 to manage off-season inventory buildup,
repaying incrementally during peak season, thus optimizing their interest payments.

10. How Oxyzo Helping SMEs With Dropline OD
Looking for a financial partner that understands the unique needs of your business? Contact
Oxyzo today to explore Dropline Overdraft solutions tailored for SMEs. Empower your
business with the right financial tools to grow and thrive. Reach out to Oxyzo’s team of experts
to set up a consultation and take the first step towards flexible, smart financing.

11. Conclusion
The Dropline Overdraft is a strategic tool for businesses that require flexible and cost-effective
financial solutions to manage their working capital needs effectively.