AI agents for business finance: what they can and can't do
What AI agents can do in bookkeeping, close, collections and compliance today, where a person must stay in charge, and how to judge a product.
The short answer
A term loan pays you a fixed sum once and you repay it in instalments over a set tenure. An overdraft lets your current account go below zero up to a limit, with interest usually charged only on the amount you use. Revolving credit lets you borrow, repay and borrow again within a limit, so it suits recurring needs; interest on a term loan runs on the full outstanding balance from day one.
Banks in Nigeria offer all three products to both individuals and businesses, and account officers often suggest one without explaining why. The right choice depends on whether your need is a one-off cost or a recurring gap, and on how predictable your income is. The differences below are about structure; the actual rates and fees for each are in the bank's offer letter.
How each product works
Term loan
You receive the full amount at once, then repay in fixed instalments over a tenure agreed at the start, commonly monthly. Interest runs on the outstanding balance from the day of disbursement, whether or not you have spent the money. Term loans suit one-off costs: a car, equipment, a renovation, a year's rent or fees. Stanbic IBTC, for example, describes its secured term loan as having fixed monthly repayments and tenors of up to 7 years (as at Oct 2026).
Overdraft
The bank agrees a limit on your current account. You can spend into it whenever you need and money coming into the account reduces the balance automatically. Interest is usually calculated on the daily overdrawn balance, so you pay only for what you use, for as long as you use it. Overdrafts are usually set for up to a year and renewed, and the bank can review or withdraw the limit. There is often a fee to set up or renew the limit even if you do not use it. Our guide to getting an overdraft covers the application.
Revolving credit
A revolving facility sets a limit you can draw from, repay and draw again during its life. It sits between the two: drawings are separate from your current account and may have their own repayment rules, but the limit refreshes as you repay. Some personal loans have a revolving feature. Stanbic IBTC's unsecured personal loan, for instance, lets you re-access funds once you have repaid 15% of the loan amount (as at Oct 2026). Credit cards are another form of revolving credit; see how to get a credit card.
Side by side
| Term loan | Overdraft | Revolving credit | |
|---|---|---|---|
| Drawdown | Full amount once | Any time up to the limit, from the current account | Any time up to the limit, in separate drawings |
| Interest charged on | Full outstanding balance | Daily amount overdrawn | Amount drawn |
| Repayment | Fixed instalments | Inflows clear it; often due in full at expiry | Per drawing or as agreed; limit refreshes |
| Typical life | Months to years | Usually up to a year, renewable | Usually a year or more, reviewable |
| Best for | One-off purchases | Short, unpredictable gaps in cash flow | Recurring needs such as stock |
| Risk to watch | Paying interest on cash not yet needed | Limit can be cut; hard to clear if used permanently | Easy to stay borrowed all year |
Worked example (illustrative rates)
A shop owner needs up to ₦1,000,000 for stock but only uses about ₦400,000 on average over a 30-day month. Assume an example rate of 30% a year for both products; this is not any bank's rate.
- Term loan of ₦1,000,000
- First month's interest about ₦25,000 (₦1,000,000 x 30% / 12), charged on the full sum
- Overdraft with average use of ₦400,000
- About ₦9,863 for the month (₦400,000 x 30% x 30 / 365)
The overdraft is cheaper here because interest follows usage. But if the owner keeps the full ₦1,000,000 overdrawn all year, the cost is about the same as the term loan and there is no plan to clear it. Add setup and renewal fees to compare properly.
Which suits whom
- Salary earners: a term loan for planned, large costs; an overdraft only if your bank offers one against salary and you will clear it each month. A payday loan or salary advance is the digital alternative for short gaps; see the comparison.
- Traders and retailers: revolving credit or an overdraft for stock that turns over, sized to the cycle of buying and selling.
- Service businesses waiting on invoices: an overdraft for timing gaps, or invoice finance if large clients pay slowly.
- Businesses buying equipment: a term loan or asset finance matched to the asset's life.
What to check first
- How is interest calculated and when is it charged to the account?
- What fees apply to set up, renew or exceed the limit?
- Can the bank reduce or cancel an overdraft limit, and with what notice?
- For revolving credit, what triggers the limit to refresh?
Where Pryme fits
Pryme Financial is a technology company, not a bank, and does not offer overdrafts or term loans. Pryme customers may be offered a Loans on Spaces limit by Solid Allianze Microfinance Bank for spending with Spaces merchants, accepted only after seeing the full terms. Businesses can see cash flow across currencies with the Finance agent before deciding what facility they need.
Questions people ask
Is an overdraft cheaper than a loan in Nigeria?
It can be, because interest is usually charged only on the amount you use each day. If you stay fully overdrawn all year, the cost is similar to a term loan, and there may be renewal fees.
What is revolving credit?
A limit you can borrow from, repay and borrow from again during the facility's life. Stanbic IBTC's unsecured loan, for example, can be revolved once 15% has been repaid (Oct 2026).
Can a salary earner get an overdraft in Nigeria?
Some banks offer salary-backed overdrafts to customers whose salary is paid into them. Ask your bank; terms and limits vary.
Which is better for a business, an overdraft or a term loan?
An overdraft or revolving line suits short, recurring cash gaps; a term loan suits one-off investments such as equipment. Many businesses use both.
Sources
- Stanbic IBTC Bank: Unsecured Loans · accessed Oct 2026
- Stanbic IBTC Bank: Vehicle and Asset Finance · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.