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Lines of Credit


Operational lines of credit serve as the liquidity backbone for businesses, allowing them to manage working capital, smooth revenue volatility, and fund growth without the friction of repeated underwriting events.

Canopy empowers financial institutions to move beyond simple, static credit limits. Our platform supports Multi-Option Facilities—dynamic credit structures where a single master line can deploy capital through various instrument types. This allows lenders to model, issue, and manage complex revolving and non-revolving structures with granular control over sub-limits, repayment logic, and interest methodology.

The "Draw-as-Product" Architecture

The defining capability of Canopy’s Operational LOC is the ability to decouple the Master Facility from the Draw Instrument.

Rather than treating a draw simply as a generic debit against a limit, Canopy allows you to configure individual draws to behave like distinct financial products. This enables borrowers to match the financing structure to the specific asset or operation being funded.

You can configure draws to function as:

  • Installment Term Loans: A draw converts immediately into a fixed-term, amortizing loan (e.g., 36 months) for equipment purchases (Capex), separate from the revolving working capital balance.
  • Purchase Order (PO) Finance: Short-term, event-driven draws used specifically to pay suppliers, often settled directly upon invoice payment.
  • Invoice Factoring / Discounting: Draws collateralized by specific receivables with repayment tied to the customer’s remittance cycle (Net 30/60/90).
  • Merchant Cash Advances (MCA): Draws repaid via variable split-settlement based on daily revenue volume rather than fixed dates.

By enabling these distinct behaviors under one umbrella, you allow borrowers to optimize their Weighted Average Cost of Capital (WACC) and avoid the operational drag of managing multiple lenders.

Core Facility Structures

1. Revolving Line of Credit (Working Capital & Sweep)

This is the standard liquidity engine. Businesses draw, repay, and re-borrow up to a predefined limit.

  • Mechanism: Funds are accessed on demand; interest accrues only on utilization.
  • Repayment Logic: Highly configurable. Supports Interest-Only (IO) periods, fixed percentage of principal, or "sweep" logic (full balance payoff).
  • Dynamic Limits: Supports sub-limits (e.g., "Inventory Tranche" vs. "General Corporate Purposes") and dynamic limit adjustments based on real-time covenant data.
  • Pricing: Supports floating rates (SOFR/Prime + Spread), tiered grids based on usage, or promotional periods.

2. Non-Revolving Line of Credit (Guidance Lines & Project Finance)

A committed facility where capacity is consumed permanently upon drawdown. Once a draw is taken, that portion of the limit is extinguished, regardless of repayment.

  • Mechanism: Ideal for "Guidance Lines" where a lender commits a total volume of capital for a set period (e.g., a $10M equipment leasing line for 2025).
  • Milestone Funding: Supports tranche-based disbursements linked to project completion milestones (e.g., Construction draws).
  • Fee Architecture: Native support for complex fee stacks, including Commitment Fees (on unused balances), Drawdown Fees, and Origination Fees.

Secured Lending & Collateralization

Any operational line—regardless of draw configuration—can be wrapped in a security agreement. Canopy supports granular Loan-to-Value (LTV) monitoring and borrowing base certificates.

Updated 4 days ago