Through constantly researching the alternative finance market, we’re finding that the Revolving Credit Facility is becoming more popular, with independent lenders offering this as an alternative to an overdraft and Invoice Finance.
A revolving credit facility lets businesses unlock cash tied up, not only in unpaid invoices but also against it’s stock and/or work in progress (WIP).
It works much like an overdraft: once the business has been granted a limit, they can draw down funds and make repayments as often as they like in a given month. Businesses only pay for what they use: if their balance stays at £0 throughout a month, that period won’t cost a thing.
Businesses must be profitable, with at least 1 years filed accounts with turnover over £250k.
Fees vary dependant on the business but as an example;
Service fee: 0.4% (on peak balance drawn pcm)
Interest rate: 0.6% (on funds drawn pcm)
In most cases there are no arrangement / set-up-fee and charges are calculated against drawn funds and not the turnover of the business.
If you think your business might benefit from a facility like this, please don’t hesitate to get in touch.