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Revolving business credit is a flexible line of funding which is available to a company to dip in and out of as and when it is needed. With this type of lending, money can be accessed, used, paid back, and then withdrawn again when the need arises. This differs to a fixed form of credit such as a commercial loan whereby a set amount is lent to a company, paid back in instalments, and once repaid these funds are no longer accessible unless by way of a brand new loan agreement. While fixed credit agreements run for a set period of time, revolving credit facilities are more open-ended. Revolving credit can take a number of forms including bank overdrafts, credit cards, and invoice finance agreements and are perfectly suited to short-term funding needs. Revolving credit facilities are typically much more flexible than fixed agreements, with the facility often growing as the company grows. Some benefits of revolving business credit:
While revolving business credit can be ideal for those looking to ease cash flow worries and have immediate access to funds at any given time, for those who need a lump sum of money for one particular purchase such as a large piece of machinery or company vehicle, it is likely to be more cost-effective to source a form of finance specifically designed for longer term borrowing. Before taking out any form of third party funding for your limited company, you should make it a priority to speak to a commercial finance specialist. It is vital your immediate need for finance is carefully balanced with your company’s long-term objectives, and that any finance agreement you enter into now will be appropriate looking ahead into the future. At UKBF our commercial lending experts will not only provide guidance as to the most appropriate channel of funding based on your company’s needs, but will also scour the market to secure you this lending at the best rate possible. Contact our team today for industry-leading help and support.
We work across a wide range of sectors throughout the UK, providing specialist advice to each sector.
Can I use property as security for a business loan?
Secured business loans require one or more assets to be put forward as collateral. This protects the lender from financial loss if a company cannot afford to keep up with the repayments at any stage.
Does my company have a credit score and how can I improve it?
Limited companies do have credit scores and they’re used for a similar purpose as individual credit ratings. Lenders use them as a guide to creditworthiness, but a business credit score is also useful for suppliers and investors to gain insight into your company’s financial situation.
What is bad debt and how can I protect my company?
Bad debt presents an insidious threat to the financial stability of your business. It places strain on your working capital and creates uncertainty in paying your bills, but this can be addressed successfully if you take proactive steps to protect your company.
What is the difference between open and closed bridging loans?
Bridging loans are short-term forms of secured finance that literally ‘bridge’ a gap between funds going out of a business and monies coming in.