Revolving loan for business

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The microcredit company VAYVND issues microloans to individuals online and in branches.
The microcredit company FinaGuru issues short-term and long-term online loans to individuals. The organization does not have a branch network; it operates remotely via the Internet.
Creditnice is a microfinance company operating since 2013. It specializes in loans with online processing, including to pay for purchases from partners; it also issues virtual credit cards and provides credit lines.
Creditify is a service for issuing urgent online loans to a bank card. You can take out a loan on a card from this company for various purposes. Income certificates and guarantors are not required.

What is a revolving loan

A revolving loan is issued to companies and entrepreneurs to replenish business working capital. Money is taken for a short period of time to support the current processes of the enterprise and quickly returned back. Lending allows you to increase sales and expand the company’s capabilities without attracting the founders’ own funds.

How does a revolving loan work?

The organization borrows money, uses funds to develop the business, and repays the loan. In this way, the entrepreneur earns money himself and brings benefits to the lender. This type of loan is taken out for a short period, usually no more than 2-3 years. The program is available to a company that has already opened an account with the selected bank or is applying for the first time.

Who is a revolving loan suitable for?

In 2024, revolving credit is available to individual entrepreneurs or LLCs. Such financing is beneficial for business for the following purposes:

Maintaining stock balances. If a company buys goods abroad and knows in advance that deliveries require additional time. It is beneficial for an entrepreneur to have a stock of necessary products available. For example, a revolving loan can help a car dealership purchase a large quantity of car covers or auto parts
Sales growth at a certain point. If you need to purchase additional goods due to high demand. For example, more Christmas souvenirs before the New Year due to increased sales
Execution of a specific order. For example, the showroom received an order to develop a large collection of clothing for the winter season. The company’s own funds are not enough to purchase material, pay for sewing and design work for the collection. The program perfectly meets these goals
Attraction of new clients. The newly opened butcher shop is in high demand among customers, but is also receiving requests for other products. To organize the supply and purchase of new sausages, the store borrows from the bank to expand its business

What are you allowed to spend money on?

This is a non-targeted loan; borrowed funds can be used for any business purpose. Order advertising to attract consumers, increase the store’s assortment, buy a batch of goods.

It is not recommended to spend borrowed money to pay off other debts or purchase goods that will not pay off immediately. The main purpose of a revolving loan is to help develop business today. Also, you should not use loan funds to purchase real estate or a company car. These investments do not bring quick profits and take a long time to return.

Lending terms

Loan terms may vary from bank to bank. Information about the borrower himself also influences.

General terms and conditions of the program:

  • Sum. It differs in each credit institution and depends on the turnover of accounts. The average loan amount ranges from $50 thousand to $10 million. In some cases, the maximum loan amount is not limited and depends on the financial condition of the borrower or the value of the collateral
  • Term. This is a short-term product, its duration can range from 1 to 36 months. If you need a longer loan, we recommend considering other types of lending
  • Interest rate. Calculated individually. Depends on the size of the business, account turnover, amount of financing. You can get a reduced interest rate by taking out a preferential revolving loan with state support
  • Early repayment. Typically there are no penalties or additional fees for early repayment unless otherwise specified in the agreement

Required documents

The most common list of required documents according to the conditions of leading banks:

  • Constituent documents of the company
  • Original passports of business owners
  • Financial statements
  • Information about the pledge and supporting documents
  • Documents confirming management revenue, contractual relations with counterparties, ownership of fixed assets of the business

Features of revolving lending

  • Issue form. Revolving and non-revolving line of credit. This is a product with the possibility of one-time or repeated use and repayment within established terms and amounts
  • Security. Money can be provided without collateral. Or collateral will be a prerequisite for issuing a revolving loan. Obligations can be secured using real estate, securities, transport, guarantees of an individual or legal entity
  • Percent. The rate may be affected by the presence of an account, deposits, or salary project with the creditor bank. The more relationships are connected with a credit institution, the more attractive conditions the bank will provide to the borrower
  • Payment schedule. As with interest rates, an individual approach is practiced. Revolving lending is often characterized by seasonal demand. Banks try to provide comfortable conditions and repayment terms to attract and retain new customers
  • Grace period. Sometimes you can get a deferment of principal repayment for 6-12 months
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