A revolving credit facility can provide an effective solution for businesses with cashflow issues or short-term funding needs. It enables businesses to spread invoices that you recieve over 2-12 months.
For each invoice, you can choose what period you would like to pay that invoice over, and you can have multiple invoices at any one time, all being over different periods of time.
A revolving credit facility can be particularly useful for small and medium-sized businesses which are growing and for businesses facing unexpected bills, late diffcustomer payments, or new investment opportunities that fall outside the budget.
A revolving credit facility operates much like a credit card or overdraft for a business. The lender gives the business access to a specified amount of credit which can be drawn upon as and when it is needed.
The business pays interest on the amount used (not the total value of the credit line) until it has been paid back in line with the terms of the facility agreement. The business can withdraw cash, use it, repay it (either via daily, weekly, or monthly repayments), and repeat, without needing to reapply.
Unlike a loan, you only pay interest on the amount you userather than the total line of credit. In addition, revolving credit facilities tend to be offered over shorter periods than a typical commercial loan or assetfinance facility, but sometimes there may be the option to extend the agreement if you continue to meet the lender’s terms and eligibility criteria.
Because they are intended for short-term borrowing, revolving credit facility interest rates tend to be higher than other types of business finance.
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There are several potential ways to use a revolving creditfacility, including:
It is important to make you aware of all aspects of a revolving credit so you can understand if it is the right fit for your business.
Higher interest rates not suitable for long-term funding
Revolving credit is intended as a short-term funding solution and as such carries higher interest rates than other forms ofcommercial funding, and these interest rates may be increased if repayments are late.
Setup fees
There is a one-off activation fee of between 3-6% of your initial credit limit which needs to be paid before you can access the facility.
Personal guarantees
All lenders will require a personal guarantee which would make you personally liable for the debt if your business cannot repay the facility.
Credit score impact
Just as you would expect with borrowed money, if you fail to make the repayments or are late in making payments it may damage your business’ credit score and future finance applications.
At Bluestone, we understand that applying for a revolving credit facility can be a daunting process, especially if you're unfamiliar with the requirements and criteria. That's why we're here to support you every step of the way.
Our Loans Specialist James Lewis has years of experience helping individuals like you secure the funding they need.
He'll work closely with you to understand your specific requirements and provide you with a range of financing options tailored to your needs.
You can contact our Loans Specialist, James Lewis at james.lewis@bluestone.app.
Alternatively, visit his page to book a meeting.
At Bluestone, we understand that applying for finance can be a daunting process, especially if you're unfamiliar with the requirements and criteria. That's why we're here to support you every step of the way.
Our team of finance experts have years of experience helping organisations secure the funding they need to cover their financial obligations. We'll work closely with you to understand your specific requirements and provide you with a range of financing options tailored to your needs.
Contact us today to learn more about how we can help you secure a revolving credit facility for your organisation.
By filling out this form, you agree to the terms laid out in our privacy policy
We know finance can be complex and often it's easier to talk things through. Drop us a message or give us a call 0330 135 8660 and we'll get back to you ASAP.
Our team are here for you, let us show you what we can do!
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