Let's have a look at the difference between revolving facilities and closed end loans.

First up, revolving facilities. Picture a pool of funds that you can dip into, repay and reuse as needed. It's like a line of credit that's readily available to you. Think, for example, of an overdraft or credit cards.

With a revolving facility, you're only charged interest on the amounts you've actually used, not the entire credit line. This makes it a flexible and often cost-effective option for managing varying financial needs. For borrowers, it's like having continuous access to funds. Great for managing cashflow or unexpected expenses. For lenders, it means more engagement with clients, but also an ongoing risk assessment. Now let's switch to closed end loans. These are your traditional one-time loans. You borrow a set amount and then repay it over time, following a pre-agreed repayment schedule. Examples for closed end loans include personal loans and mortgages, and also so-called term loans for companies.

Once the loan has been repaid, the loan contract is fulfilled. You don't owe the lender money anymore. Your debt's being repaid. If you are looking to take on new debt however, you'll have to negotiate a new loan with the lender as you can't usually reborrow the amount under the same loan contract. The repayments of closed end loans can vary. Some are repaid in a single repayment, often known as a bullet at the maturity date of the loan.

Others are repaid in equal amounts over the life of the loan, often known as an amortizing loan, and sometimes balloon repayments are offered. This means smaller installments initially followed by a large final payment. Whether it's the adaptable nature of revolving facilities or the structured approach of closed end loans, each has its unique benefits. The key to borrowers is to match the loan type with their financial situation and repayment ability.