Revolving credit is a type of credit that does not have a fixed number of payments. A customer pays a commitment fee and is then allowed to use the funds when needed. The amount can fluctuate each month.
Types of revolving credit for business
- Business lines of credit
- Business credit cards
When you get revolving credit for business you only pay interest on the money that you use. You get a pre-set spending limit and you can borrow up to the limit as needed. When using a credit card for business, as you pay back what you borrowed, your available credit goes back up.
Business credit cards are convenient for quick purchases. As a business owner you are often facing a number of risks, opportunities and challenges. One way to improve business growth may be through the use of a business credit card. While much can be said about the merits and disadvantages of using a credit card, the reality is that by managing it well and making sure that you repay it on time, your business can gain quite a lot.
Business lines of credit can be costlier than a credit card and you can borrow a much larger amount of money. So as soon as you’ve paid back the amount you owe, you then have the ability to re-use that money.
Revolving credit for business may be harder to qualify for than a business loan. If you’re not producing any revenues and your business hasn’t built up a good business credit score, then you may not qualify.
It’s important to make timely payments. The typical repayment term for revolving credit for business is 6 to 12 months.
Read your terms and conditions thoroughly and make sure you read the fine print.