Credit facility in use by a limited liability company

A credit facility refers to a credit limit granted by a bank or financial institution, from which a company can withdraw funds as needed up to an agreed maximum amount. In practice, it functions as a revolving line of credit rather than a one-time loan.

How a credit facility works

A bank or financial institution grants a company, for example, a €10,000 credit limit.
The company can use only part of it (e.g. €3,000).
Interest is typically charged only on the amount used, not on the full limit.
When the borrowed amount is repaid, the same credit limit becomes available again.

How a credit facility is handled in UKKO Entrepreneur’s limited company service

When you draw funds from the credit facility into your company’s account (a separate income entry must be created for each withdrawal):

• Create a completely new income voucher in your UKKO account and attach the credit facility agreement with its detailed terms.
• Select the transaction type “Drawn loan”, add amount (VAT is 0%).
• In the description, write that this is a withdrawal from a credit facility.
• Assign the the account transaction / mark the income as paid.

When you pay interest on the credit facility or repay the loan:

• Create a completely new expense entry in your UKKO account and attach the invoice or receipt from the credit provider for the interest, or if repaying the loan, include repayment details or similar documentation.
• Select the transaction type “Loans”, choose correct specification, add amount (VAT is 0%).
• In the description, write that this concerns credit facility interest expenses / loan repayment.
• Assign the account transaction / mark the expense as paid.