We are seeing an increasing use of revolving unsecured credit facilities that are now provided by niche lenders. These facilities are totally unsecured, but utilise credit insurance on the borrower. So if the borrower is profitable, has net assets in excess of £250k and established more than 2 years, an insurable limit can usually be obtained.
Funding up to £1million, can be used, repaid and reused as often as cash flow cycle requires. The lender simply pays the supplier direct, no lien is taken over any purchases and the “credit line” can be utilised for up to 120 days.
There are no set-up fees and no minimum transaction volumes. As charges are only made when the facility is used, it offers an excellent back up finance facility without charges on the company or personal guarantees. Also because this facility does not compromise the security arrangements with other business funders, this unsecured credit facility can work alongside existing business bank finance.
Advantages of a revolving credit facility:
Additional Funding over and above existing lines
Pay as you use arrangement
No security required
No personal guarantees required
Take advantage of opportunistic purchases
Negotiate supplier discounts for early repayment
We have utilised this facility for a number of our clients, for a variety of purchases from steel, raw materials, food through to caravans and motor vehicles.
It works and clients like the flexibility. It’s good to see Alternative Lenders coming up with innovative and appropriate financial products to compliment bank lending.