A flexible overdraft, it’s a cost-efficient way of having business finance when you need it. However, you don’t incur charges when it isn’t used. On the other hand, the facility is often chargeable at a day rate meaning it’s transparent and easy to work out. The day rate is based on the number of funds in use, so it can be costly if you use constantly use the facility. In brief, that is why it addresses short-term cashflow issues with this type of business finance not designed for long-term issues.
The revolving credit facility is unsecured meaning it is usually linked with only an unsecured personal guarantee to yourself. Consequently, if anything happens to the business, you will find yourself liable for the remaining amount.
Most funders look at three months of bank statements and full financial accounts to determine the amount available to the business. Once the information is reviewed in 2-4 days, most facilities are set up
Many businesses like the non-committal approach; however, the rate can work out very expensive if used for a substantial length of time. Considering what the business finance is for and how it will be used is vital. We always endeavor to understand the requirement for funding and whether a revolving facility is one of them.
It’s a great way of having that flexible overdraft when you need it, and not incur charges when you don’t.