Revolving Credit Facility

Much like an overdraft, revolving credit facilities are not static business loans. Your business will have pre-agreed a funding limit with the lender, and you can go about withdrawing the funds and repaying it and withdrawing again – just like an overdraft.

Funds replenish as you make repayments, which is where the ‘revolving’ term comes from. It is a rolling agreement between bank and business where credit is replenished up to the agreed threshold which is known as the credit limit. The business can then access the funds any time when needed. The revolving credit is a kind of credit that allows you to withdraw money, and then use it for business finance purposes, repay it, and then withdraw it as a business loan again when you feel that you need it. 

Revolving credit is a flexible funding solution. It is also considered to be the best alternative finance in the market to this day.

Funds are always available

The significant advantage of using a revolving loan is that the funds are always available for you. Whenever you need it you can withdraw it and pay interest only on your withdrawal. The approval process is fast and smooth.

BENEFITS

Secured Finance

In some cases, revolving credit can be asset secured. This way, you will lower your interest rate. Unlike credits cards, which can’t be secured, a revolving loan can be secured based on real estate, equipment, inventory, and other assets that you have.

BENEFITS

Who is it good for?

Useful for operating purposes, especially for any business experiencing fluctuations on its cash flows. 

Beneficial for business owners who need immediate credit to purchase equipment, stocks, products and more. 

A revolving loan can be useful for people who need to pay emergency bills, pay for repairs, medical bills, and so on.

Who is eligible?

  • Max credit limit 10% of turnover.
  • Limited companies only.
  • Debenture required.
  • Personal guarantee required from a property owner.
  • No unsatisfied CCJs.

How Much Does It Cost?

Revolving credit facilities are best for short term cash flow gaps as opposed to long term needs, so the cost reflects this. Typically, daily interest rates would be between 0.05% and 0.1%. Rates are typically higher than with a regular business loan.  Revolving credit facilities are best for short term cash flow gaps as opposed to long term needs, so the cost reflects this.

They typically have an APR 0.75-6% per month. It is a draw down facility, so the lender will only charge interest on the amount you use.  Most lenders will typically charge interest on the outstanding loan amount per month.

Qualifing questions

Can I Borrow?