{"id":8882,"date":"2023-02-08T11:56:34","date_gmt":"2023-02-08T04:56:34","guid":{"rendered":"https:\/\/fazz.com\/?p=8882"},"modified":"2024-02-21T12:44:45","modified_gmt":"2024-02-21T05:44:45","slug":"what-is-revolving-credit-line","status":"publish","type":"post","link":"https:\/\/fazz.com\/newsroom\/business\/what-is-revolving-credit-line\/","title":{"rendered":"Business Loan: What is a Revolving Credit Line (RCL)?"},"content":{"rendered":"\n
A revolving line of credit is a a great financing option for businesses, especially SMEs. It enables them to take on growth opportunities and tackle cash flow gaps which may happen in the course of running their business. Most of the time, businesses may not always have the required capital, making revolving credit lines an essential type of business loan<\/a>. <\/p>\n\n\n\n Here is a detailed guide about revolving lines of credit, along with examples, advantages, and other important information you need to know.<\/p>\n\n\n\n Simply, a RCL is a pool of money that borrowers can access whenever they need to. Borrow any amount within the credit limit, and repay based on the amount used with interest. Upon repayment, the credit limit is replenished back to full, and you can continue borrowing.<\/p>\n\n\n\n Thus, it’s a great option for businesses that periodically need working capital for various needs. <\/p>\n\n\n\n Here are some examples of how this financing solution can be used in different industries:<\/p>\n\n\n\n As seen from the above examples, RCLs can be useful especially as businesses cannot always rely on sporadic customer payments, and there might be sudden or seasonal increases in demand.<\/p>\n\n\n\n After the borrower has been approved for a RCL, a maximum limit will be set for the line of credit based on the borrower\u2019s credit score, credit history, and income. The total amount available can be used at once or spent as needed.<\/p>\n\n\n\n By the end of the billing cycle, the borrower gets a billing statement with a required minimum payment. The borrower only needs to repay the amount borrowed instead of the full credit. However, they can also choose to pay off the entire statement balance, another amount, or the minimum payment. After the payment, that amount becomes available to borrow again. The balance that is carried over to the next billing cycle will then be subject to fees and interest.<\/p>\n\n\n\n Here are some examples:<\/p>\n\n\n\n A business line of credit is a popular type of business loan that is commonly issued by banks and alternative lenders<\/a>. This line of credit is frequently used among business owners as there is more flexibility to finance seasonal expenses or growth opportunities.<\/p>\n\n\n\n Credit cards are the most well-known type of revolving lines of credit. As long as you make the minimum payments every month, you can pay off the items you charge for your business within your credit limit on your own schedule.<\/p>\n\n\n\n A personal line of credit is secured by assets. However, some lenders provide unsecured lines of credit to borrowers who are highly qualified.<\/p>\n\n\n\n For smaller businesses, revolving credit lines are often more ideal since there is the option of paying just the minimum amount due. This is less straining, especially when cash is tight.<\/p>\n\n\n\n In contrast to regular loans, a revolving line of credit allows borrowers to secure funding in advance by giving access to funds that can be used at any time needed. With ready access to funds, the business\u2019 short-term or urgent cash needs can be taken care of.<\/p>\n\n\n\n Borrowers can decide how they want to use the borrowed funds, whether to purchase equipment, pay for unexpected expenses, deal with seasonal order surges, any many more. Moreover, there is no such thing as over-borrowing and paying for supplies that won\u2019t be used.<\/p>\n\n\n\n Due to the fewer documents required and not having collaterals, RCL applications are processed faster, allowing business owners to gain access to the cash they need more quickly as compared to a traditional loan.<\/p>\n\n\n\n The requirements depend on the lender that you choose, so do ample research on the lender you are interested in. Generally, you will be required to prepare your company\u2019s balance sheet, income statement, and cash flow statement to establish your ability to repay the loan.<\/p>\n\n\n\n Revolving lines of credit remain open until the lender or borrower closes the account. They also have maximum limits and monthly payments. A non-revolving line of credit, or simply a line of credit, is a one-time arrangement, in which the account will be closed by the lender once the credit line is repaid.<\/p>\n\n\n\n These are the steps to get a revolving line of credit:<\/p>\n\n\n\n Banks and alternative lenders such as Fazz Business<\/a> provide revolving lines of credit. Take a look at the requirements, eligibility criteria and interest rate before you apply. <\/p>\n\n\n\n Compile the required documents and submit your application. Nowadays, most applications for a revolving credit line can be done online on the lender\u2019s website.<\/p>\n\n\n\n If you qualify for a revolving line of credit, you will be given a term sheet to review before accepting and closing on your loan, which may involve signing an agreement. Once the deal is made, you will be able to access your fund within days.<\/p>\n\n\n\n Fazz offers a Revolving Credit Line for business owners to accelerate their growth with quick, ready access to working capital. With Fazz Revolving Credit Line, borrowers can obtain credit on demand without any hidden costs. The repayment options are also flexible, allowing you to pay at your own pace. <\/p>\n\n\n\n Our interest rate starts as low as 2% per month depending on your credit assessment with approval within 48 hours, and a validity period of 12 months. Apply for a Fazz Business Loan<\/a> here for financing that drives business results!<\/p>\n","protected":false},"excerpt":{"rendered":" A revolving line of credit is a a great financing option for businesses, especially SMEs. It enables them to take on growth opportunities and tackle cash flow gaps which may happen in the course of running their business. Most of the time, businesses may not always have the required capital, making revolving credit lines an […]<\/p>\n","protected":false},"author":19,"featured_media":8886,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"content-type":"","footnotes":""},"categories":[548],"tags":[267,71,373,75,48,72,412,73],"yoast_head":"\nWhat is a revolving credit line?<\/strong><\/h2>\n\n\n\n
Food & Beverage <\/h3>\n\n\n\n
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Wholesale <\/h3>\n\n\n\n
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Logistics <\/h3>\n\n\n\n
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How does a revolving credit line work?<\/strong><\/h3>\n\n\n\n
What are some examples of revolving credit line?<\/strong><\/h2>\n\n\n\n
Business line of credit<\/h3>\n\n\n\n
Credit card<\/h3>\n\n\n\n
Personal line of credit<\/h3>\n\n\n\n
What are the advantages of a revolving credit line?<\/strong><\/h2>\n\n\n\n
Flexible repayment terms<\/h3>\n\n\n\n
Get cash on demand<\/h3>\n\n\n\n
Flexibility of use<\/h3>\n\n\n\n
Faster processing<\/h3>\n\n\n\n
Revolving Line of Credit FAQs<\/strong><\/h2>\n\n\n\n
How to qualify for a revolving line of credit?<\/h3>\n\n\n\n
What is the difference between a revolving line of credit and a line of credit?<\/h3>\n\n\n\n
How to get a RCL?<\/h3>\n\n\n\n
Step 1: Research and pick a lender<\/h4>\n\n\n\n
Step 2: Make your application<\/h4>\n\n\n\n
Step 3: Accept terms and close<\/h4>\n\n\n\n
Grow your business with a Fazz Business Loan<\/strong><\/h2>\n\n\n\n