In the face of these unprecedented and uncertain days of
COVID-19, financially stressed borrowers are expected to take every
measure available to them to keep their businesses afloat. For
borrowers with revolving credit lines, this has included drawing
down unused availability to ensure immediate, and sometimes future,
access to needed liquidity. In ordinary circumstances, a revolver
provides a borrower flexibility to address changing cash flow needs
on a cyclical or seasonal basis. Today, an untapped revolver may be
a lifeline for a business struggling with the loss of cash
flow.
In such times of crisis, maintaining cash on hand, whether for
immediate needs or as security to better protect against unknown
future consequences of the virus, may be a good business strategy.
While such a borrowing, whether protective or not, triggers
interest expense on these new advances, today's extreme
interest rate environment minimizes those additional costs (indeed,
in certain
