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What are Available Funds?

G. Wiesen
G. Wiesen

Available funds constitute money or other types of funds that are actually available and can be used. This is often in contrast to money or funds that exist in a more theoretical state, often called pending funds, which are not yet available for use in a bank account or similar system. Available funds may also refer to money that does not necessarily exist at any given time, but which can be accessed quickly and easily by a person or business. These types of funds usually include money that can be raised quickly through loans, lines of credit, or the selling of stocks.

The term “funds” typically refers to money, which is to say literal money or investment capital to which a person or business has access. Available funds are those that a person either has in his or her physical possession or can easily withdraw from a bank or similar account for immediate use. This is often in contrast to pending funds, which are funds that will be available for use but are not currently accessible.

Man climbing a rope
Man climbing a rope

If someone deposits a check into his or her bank account, for example, then that amount will usually be seen as pending funds at that time. This remains true until that check clears between the bank at which it is deposited and the one from which it is drawn. Once this happens, the funds become actual money in the person’s account and are added to the available funds within the account.

Some banks will clear checks right away and add the amount to a person’s available funds, though he or she will usually require a particular type of account in good standing. Many banks and similar institutions will often instead allow a certain amount to become available immediately and hold the rest as pending funds until the check clears. Once it clears, the funds move from pending to available and can be utilized by the account holder.

Other types of available funds can include any money that a person or business can quickly and reliably gain access to within a short period of time. These types of funds include available loans that have not been taken or lines of credit open to the person or business. While these may seem more like pending funds, this type of money is often viewed as available funds with regard to the overall value of a company or person in terms of total liquidity. The basic idea is that in an emergency situation, the person or company would have access to this type of money almost immediately and are therefore considered available.

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