Loan Sweeps and Balances
Trace both accounts.
Estimated reading time: 1 minute
Itasca Bank describes loan sweeps that link checking and a credit line: excess cash reduces debt, while borrowing can replenish cash. A sweep is not income.
Fictional arrangement: maintain a $5,000 checking target, repay principal only up to debt outstanding, and permit sufficient redraws when cash falls short. Ignore interest, fees, holds and other restrictions; these are invented terms, not the bank’s offer.
Start with $18,000 cash and $9,000 line debt. Cash exceeds the target by $13,000, but only $9,000 can repay debt. After sweeping, cash is $9,000 and debt zero—not $5,000 cash and negative debt.
Next, a $6,000 operating payment leaves $3,000 cash. A permitted $2,000 draw restores cash to $5,000 and creates $2,000 debt.
Check cash minus line debt: $9,000, still $9,000 after repayment, then $3,000 after the operating payment and redraw. The draw changes where funding appears, not that net position.
Confirm sweep timing, target rules and borrowing availability. A target is not guaranteed funding, and repaying the line does not establish a right to borrow again.
