How do they work?
Revolving credit, as the name suggests, is not a static loan like a standard business loan. They operate in a similar way to an overdraft or credit card, in so much as you may borrow some money, repay it, and then draw it back down as and when you need it.
You will usually have a pre-agreed funding limit, which is determined by the strength of your business and its ability to repay the debt, once drawn down.
Interest is usually charged on a daily basis, depending on how much money is outstanding on that day. That means you only pay for the money as you use it. Revolving credit facilities usually come with no long-term commitment, meaning you can use it just once, to cover a blip, or regularly as part of running your business.
How do they compare to traditional business loans?
A traditional business loan is a fairly static facility. Funds are borrowed in full and then repaid each month through a set monthly repayment figure.
Revolving credit allows you to borrow and then repay as needed, as mentioned above.
There is no ‘best’ product for every situation, instead, each product will work better in some situations, with the other being better in others.
Loans are a great way to inject a lump sum of cash into a business to fund a large, one-off expense, or to consolidate other debts.
Revolving credit is generally a better solution for adding a cash ‘float’ which can be dipped into and repaid regularly.
Will I qualify?
Specialist revolving credit can be much easier to a secure than other types of business loan, and far easier than an overdraft from a major bank.
If your business is profitable and has been trading for three months or more, then you would theoretically be eligible for some level of revolving credit. Of course, a full assessment of the business would be required to guarantee funding.
The amount that you’re able to borrow will depend on the strength of the business, the turnover, cash flow and the credit history of the business and owners. Previous adverse credit doesn’t mean you definitely can’t secure a business revolving credit facility, but further information would be needed to assess your eligibility.
How quickly can I access the funds?
We are often able to get a credit-backed decision for customers within 24 hours of your application. The finance will usually be complete, and funds drawn down into your bank account within 2-3 working days, where your application is successful.
For some sectors, and with certain lenders, credit decisions can be almost instant, and funds are drawn down on the day of application, others can take a little longer.