What Is a Dugger?
A dugger is a short-term financing arrangement in which a lender provides immediate funds to cover a borrower’s obligations, with the expectation of repayment once the borrower receives incoming capital. The term is used in commercial lending and cash management to bridge temporary liquidity gaps.
How Duggers Function in Practice
Companies use duggers when they face a timing mismatch between outgoing payments and incoming revenue. The lender advances the required amount, often secured by invoices or expected receipts. Once the borrower collects the receivable, the advance is repaid, and the facility is closed or renewed.
Key Features and Considerations
Duggers are typically short duration, require clear documentation of expected inflows, and carry interest or fees based on the advance amount. They are not long-term debt solutions. For more details on short-term lending structures, see this Investopedia overview.
