Apply for a revolving credit facility

If approved by a lender, you’ll be extended a line of credit which will either be deposited into your account or offered to you as a transfer facility or cheque. You then use the funds, repay the money including any possible interest, and borrow again when you’re ready to. You are charged interest on the amount you borrow, rather than the amount of credit extended to you.

• Risk of falling into arrears: Missing a payment and falling into arrears can have a serious consequence on you and your business. Consider carefully how much credit you’d like to leverage and be careful not to overexert your business.

• Variable interest: Revolving credit facilities often come with variable interest rates. While interest rates can go down, they can also go up.

• Fees and penalties: Revolving credit facilities can come with fees. Be sure to read what you’re expected to pay in advance. Missed payments can also carry additional penalties.

• Interest rates: Due to the short term nature of revolving credit facilities you may be charged higher interest rates than if you were taking out a more traditional fixed term loan.

We may be able to help there. As a broker, we help connect borrowers to lenders offering between £1000 and £20M. Just submit your information here and we’ll see if we can find you any suitable lenders.

Whether you use our service or search for suitable lenders using another method, it’s important to find out what’s available to you and compare features. For example, one lender may offer a lower interest rate, but also a reduced line of credit, whereas another may offer more credit, but they might request a personal guarantee. Consider all the available options before making an informed decision.

Once you’ve found a suitable lender, gather together all your documents (a business plan, cash flow projections, and company information) and submit a formal application. Then, it’s just a case of waiting to hear the decision.

Don’t forget, your current financial provider may already offer this service, so it’s worth checking in with them to find out if they can extend a favourable solution to you.

Maybe. Whether or not you need a personal guarantee will depend on you, your lender, and your business. You’re more likely to be asked for a guarantee if your business is new, has poor credit, or is considered high risk.

Secured loans are backed by some form of collateral or security, for example, a property can be used to gain access to a loan. Unsecured loans do not require collateral. Revolving credit facilities can come in either form. It’s up to you and your lender which one you choose to go for, however, generally, secured loans will come with lower interest rates.

Revolving credit facilities are different from credit cards as the funds are usually deposited into your account or you’re provided with some other form of non-card access to the funds. This makes going over your credit limit a little different. Usually, you can only exceed your limit if you’ve been provided with a soft limit. In this case, while the exact consequences of going over your limit will vary from lender to lender, you may be charged higher fees, see a negative impact on your credit score or that of your business, and you might see increased interest rates. Keep communication with your lender open so you’re as informed as possible.

With a term loan, credit is extended to you along with a payment schedule. You return the funds along with payment for any interest or fees and the loan is considered complete. On the other hand, with revolving credit facilities, the lender sets an overall limit and it’s up to you how much and how often you withdraw funds.