These days, anyone who owns a business wants a true revolving business line of credit more than any other funding option. But what is a “true revolving” business line of credit, and what makes it better than “normal” small business loans and business credit lines?
Read on to find out!
Revolving Business Line of Credit Definition
A revolving business line of credit is an unsecured type of credit line that allows business owners to draw only the amount of capital they need at a time, which they can then replace back into the total of their credit line, where it becomes immediately available to draw from once again.
This “revolving” nature of this type of business LOC from “normal” business lines of credit and business loans. They are also unique in that they require no collateral to be leveraged.
Although somewhat harder to obtain than other funding options due to no collateral requirements, business owners often benefit from a lower cost of capital, greater control over the funds they use, and flexibility to draw funds as needed to prepare for any business challenge or opportunity.
Top 9 Benefits of Revolving Business Line of Credit
Here are the 9 most common reasons why more business owners are choosing revolving credit lines over any other funding options:
- Draw, Replace, Draw Again: This is where the “revolving” part comes in. With a revolving credit line, you can draw only as much capital as you need from a credit line, replace it if you’d like, and then this amount becomes immediately available to draw from again!
- Immediate Access to Cash=Greater Flexibility: True revolving credit lines are some of the fastest funding options available. Connected through technology, business owners can rely on their revolving credit lines to be immediately accessible to use whenever they need funds. This is especially useful to have in preparation for unexpected business challenges and opportunities. Through our expedited funding process, we can equip business owners with a true revolving business line of credit in as little as 24 hours.
- True Interest Rate APR: Revolving credit lines follow a lower true interest rate APR compared to other funding products like MCAs and other forms of business lines of credit that follow factor rates.
- No Real Estate Collateral Needed: Revolving business lines of credit are often unsecured, meaning you don’t need to leverage any real estate assets as collateral.
- No Prepayment Penalties: No penalty will be given to those who wish to pay their credit lines down or pay them off entirely at any time.
- Higher Control = Lower Cost of Capital: Because you can control exactly how much they want to draw, exactly how much you need at a time, you can have peace of mind knowing you’ll never have to worry about borrowing too much.
- Don’t Pay for What You Don’t Use: Unlike other funding options, you don’t have to pay for the total amount of your credit line borrowed. You can feel secure knowing you have available funds to draw from, even if you’re not using them.
- Build Your Credit as You Use It: As you draw from and use capital from your revolving credit line, you are, in turn, building your FICO score!
- Grow Your Credit Line as Your Business Grows: Banks take a stringent and frustratingly slow approach to expanding credit lines as requested by business owners. Fortunately, our revolving credit lines are constantly being reviewed in order to qualify business owners for credit line growth as their business grows.
Where to Get a Revolving Business Line of Credit
You can either get a business line of credit through a traditional bank, credit union, non-bank lender, or a FinTech marketplace, like National Business Capital.
Banks typically don’t like to offer revolving business lines of credit, as they see unsecured credit lines controlled entirely by business owners as a riskier move than other funding options. This often results in inflated eligibility criteria, collateral requirements, high interest rates, and slow processing speeds.
Non-bank lenders are essentially the opposite. They’re characterized by less restrictive qualifications and – as a trade-off – higher interest rates. Although the cost of capital is often higher than banks and credit unions, many business owners leverage non-bank options for accessibility and fast funding times, especially when their opportunity projects to offset the higher interest rate.
Comparing the options available to you will require some time away from the day-to-day operations of your business, which many owners can’t afford. The friction led to the creation of FinTech marketplaces that combine multiple lenders into one centralized platform. At National Business Capital, our team leverages a diverse 75+ B2B lender platform to match our clients with the most competitive financing options they qualify for.
Not only does our process save you time, but it allows you to secure higher funding amounts and better terms while learning ROI strategies to maximize the value of every borrowed dollar from our expert team. All you have to do is tell us how much you need and when you need it, and our team does the form-filling, negotiation, and heavy lifting it takes you get you the best possible offer.
Secured vs. Unsecured Lines of Credit
When comparing credit lines from lenders, you may have come across two different types: secured and unsecured. The main difference between the two is whether or not collateral is required.
Some lenders put a lien on your assets to secure the credit line, meaning you could lose those assets if you find yourself unable to pay back what you draw out. Many lenders look at unsecured loans as liabilities and are therefore wary to extend this type of credit.
Alternative lenders have less stringent qualification requirements, allowing businesses with low credit scores and short operating histories to access credit lines without worrying about the possibility of losing their assets. Since you don’t have to put up any collateral for unsecured lines of credit from National, this structure is less risky for you as a business owner.
Am I Limited to a Low Revolving Line of Credit?
If you have a lower credit score or operate a business in a “high-risk” industry, you may not be able to qualify for a line of credit or the desired amount.
Qualifying businesses tend to have lower limits and pay more in interest on the money they borrow. National Business Capital works with merchants across industries. We look at factors beyond credit scores to determine credit limits, terms, and rates. With a truly revolving line of credit, you can borrow exactly what you need up to your credit limit and know the funds will always be there to help cover expenses.
How to Get a True Revolving Business Line of Credit
If you think a revolving credit line would be the best funding option for your business, your next step is to apply with a lender of your choice. For those wanting to save time and find the right option as quickly and efficiently as possible, here’s a glimpse at National Business Capital’s process.
- Apply Securely Within Minutes – Move through our streamlined application within minutes and upload your business documents with zero risk.
- Review Your Offers – Compare your offers with expert advice from our team and select the best one for your specific circumstances.
- Receive Your Money – Seize an immediate opportunity to grow your business or tackle a new challenge with confidence.
Ready to see all the options you qualify for? Complete our digital application to take the first step, and our team will be in touch shortly.