A PCL account is an uncommitted facility, although loans to individuals and trusts may be committed up to $100,000. This means the bank retains significant flexibility and can demand repayment at any time.
In simpler terms, a PCL account functions as a line of credit where:
- Uncommitted Facility: The bank is not obligated to provide funds up to a pre-determined limit. They can choose to deny a request for funds, or change the terms, at any time.
- Limited Commitment for Individuals/Trusts: A portion of the PCL account, specifically loans to individuals or trusts, can be committed up to a maximum of $100,000. Even with this commitment, the bank can still terminate the commitment immediately.
- Demand Repayment: The bank retains the right to demand full or partial repayment of the outstanding balance at any point, giving them significant control over the account.
- Terminable Commitment: Even if a commitment exists (e.g., for an individual loan), the bank can immediately terminate it.
Essentially, a PCL account offers less security and predictability than a traditional committed line of credit. While it might provide access to funds, the terms can change rapidly at the bank's discretion. This makes it crucial for borrowers to understand the risks and limitations involved.
