Revolving Credit
Table of Contents
What is Revolving credit facility?
Revolving credit facility it’s a credit line facility which allows business to draw on facility whenever they need funds. It’s a pre-approved credit line facility for the term. The interest is only charged on the amount of loan used. This is quite similar to bank overdraft facility or Business credit card. Facility provided to business with fluctuating borrowing needs and temporary requirements which gives the business the needed cash flow at any point of time. Revolving credit facility are a good alternative to overdrafts or to Business credit card.
Is my business eligible for Revolving credit facility?
- UK Businesses
- Sole traders, Limited company or Limited liability partnership (LLP) in the UK.
- Actively Trading
- Should have Business bank account
How does it work?
It’s a simple, flexible and quick funding option for Merchants which allows them to borrow finance from a lender and then make repayments comfortably through future customer card transactions.
Lenders will offer you finance which will be equal to your monthly turnover. There will be a fixed fee charged by the lender on the facility. So, whenever you are taking cards in the business a small amount goes to the total repayment.
Example: If a payment of £200 is processed through your card machine, you would keep £180 and the remaining £20 goes towards the repayment to your lender via your merchant bank account.
How much funds you can get?
Amount is dependent on the health and size of the business. Amount starts with £5000 to £500000. There will be a credit line facility offer by the lender where you can withdraw the amount on the basis of your need. Whatever amount you used you have to pay the interest on it. You can use this facility multiple times. Revolving credit facility can be used up to a limit.
How its work? How to paid back Revolving credit facility?
After evaluation, the lender will offer you these facilities. The interest is only charge on amount which you are using. There will be a monthly interest on the facility. You will be paying only monthly interest till the time you settled the facility. You can close this facility whenever you want to. Once you pay off the amount which you borrowed the facility is settled.
What are the advantages or merits and disadvantages or demerits of Revolving credit facility?
Advantages or Merits
- Quick money whenever you want.
- Reserved cash flow.
- Early settlement.
- Multiple withdraws
- Hassle free process
- Amount as needed
Disadvantages or Demerits
- Short term.
- Frequent use.
- Influence to use, as its available.
What are the minimum documents required for a Revolving credit facility?
- To place the application:
- Register document required – Filed Accounts
- Supporting Document required – Business Bank Statements
How long does it take for Revolving credit facility to be approved?
Frequently Asked Questions
Can I use it multiple time?
Yes, you can use it multiple time the lender will give you limit.
Can I have multiple Revolving credit facility?
Yes, you can have multiple Revolving credit facility it’s a matter of approval which is based on business affordability.
Not willing to go with Revolving credit facility?
No problem, we have other options as well we can get you Unsecured Loan or Merchant cash advance.