Revolving Credit Facility
Acceptance within 48 hours
Quick and easy application
No bulky business plans required
Option to renew once terms complete
What is a revolving credit facility?
Revolving credit is a line of credit which allows a business to access funds whenever necessary. Instead of having to reapply for new credit once you’ve paid it back, this type of credit remains accessible. You’ll agree a limit – based on affordability tests and your credit rating – and have access to that amount until your terms are up or you to decide to end the service. Most terms last up to 2 years, and providing you have paid on-time throughout, you’ll often be eligible for a renewal. This kind of business funding is comparable to an overdraft. That’s because you can access the revolving loan over and over again, providing you continue to pay off your balance.
Why use revolving credit?
If your business’s cash flow is a little irregular or sporadic, revolving credit can help get through the tougher periods. Unlike a loan or cash advance, you’re only charged for what you use. This makes it a great back-up option for unexpected expenses or periods where your business is less fruitful. Revolving credit for companies usually features interest expenses, however, they are often generally favourable than credit card rates.
Why use revolving credit?
A revolving loan is similar to an overdraft. You’ll agree a maximum amount with a lender and then be able to access up to that amount whenever needed. You’ll only pay interest on the periods where you are using the revolving credit facility.
For example, if you use £5000 of your £10,000 allowance in January and pay it off the following month, you’ll only pay interest from the day its taken out to the day you’ve repaid. If you pay a small amount off over a number of months, you’ll only pay interest on the remaining balance. As a rolling agreement, the only time your access to funds will stop is when you’ve already hit your limit, or you’ve cancelled your plan.
How is revolving credit calculated?
Like all lines of credit, revolving credit for business is calculated on a number of criteria. Most important is your credit rating. The better it is, the more likely your acceptance and the higher credit limit you’ll be able to access.
The size of your business will also be taken into account – both in terms of assets, turnover and number of employees. But don’t worry, this doesn’t make applying for revolving credit arduous. Use our quick application form at the top of this page and one of our advisors will get back to you and take you through the simple steps for acquiring a revolving credit facility.
Will revolving line of credit hurt your credit rating?
Like any form of credit, there is always the risk of your credit rating being affected negatively if you don’t make repayments on time and to the required amount. On the flip side, when used properly, revolving loans can help improve your credit score. Here are some tips for using a revolving credit facility to your advantage:
- Pay off balances every month – Businesses who pay off their balances every month show future lenders that they are responsible and can afford to use credit. Consistent payments indicate a healthy credit profile. This doesn’t necessarily mean you need to pay in full every month but try and pay off more than the minimum required. Check your individual terms as you’ll probably be charged with late payment fees if you don’t keep up.
- Keep balances low – Having more available credit than you need indicates to lenders you won’t max out your allowance in one transaction and then struggle to pay it off. For a healthy credit profile, try to keep your usage under 30%. Of course, if you need to use more, that’s fine, but make sure you have budgeted future funds to bring your usage down.
- Avoid repeat applications revolving credit – If you’re rejected for a revolving credit facility, speak to one of our advisors as they can help you recognise what you need to be accepted in future. Repeat applications are typically best to avoid, whether or not you’re likely to be accepted. Before applying for any credit, be sure to have considered your credit score first. If you need advice and help understanding your rating and what credit you’re likely to be accepted for, speak to one of our friendly advisors.