Does Your Business Need a Fast $1 Million Revolving Business Line of Credit?
As an entrepreneur, you constantly need access to working capital to grow your business. However, not even successful businesses are immune to late invoices, unplanned business expenses, and flash opportunities where immediate access to cash is needed to capitalize on an opportunity or be a lifeline to keep business going. In such unforeseen circumstances, accessing quick funding could be the difference between losing to your competitors and dominating the market.
Although banks may be convenient, they have stringent measures that even with excellent credit scores and high revenue, you may still not qualify. Also, sometimes banks tighten their lending criteria in economic downturns. But above all, their funding process is notoriously slow which causes the business owner to miss out on great opportunities or lose unnecessary revenue. If this is a known industry issue, there must be an alternative solution right?
A revolving business line of credit is a common funding source for businesses in need of flexible and fast cash for fluctuating business needs. The flexibility of this financing product makes it suit most business expenses.
In short, a revolving business line of credit can help you hedge future problems and position you to take advantage of future opportunities that you can’t see today.
This article will help you better understand how a $1 million revolving business line of credit can help your business take advantage of flash opportunities, hedge against uncertain times and most valuable of all, buy time.
But first, here’s what you need to know about a revolving business line of credit.
Do You Pre-qualify?
What Is a Revolving Business Line of Credit?
It is a pre-approved bucket of money dedicated and made accessible to you that you can draw down on as needed and then repay to replenish your bucket to have access to again, sort of like a credit card, but better. Unlike term loans designed for specific purposes, you can have a business line of credit and use it for any business related activity whether it is operational expenses, capital expenses or even investments.
Also, there are other revolving business lines of credit you can draw money and make payments anytime without early payment fees, unlike term loans with fixed payment plans and penalties for early re-payment.
Why else should you consider a business LOC to grow your business and increase revenue?
How $1,000,000 Revolving Business Credit Line Can Make You More Money
As an entrepreneur, you know that fast cash can be the difference between success and failure. In a quick turnaround deal, having $1,000,000 at your fingertips (or more) can mean the difference between success and missed opportunity.
But when traditional routes to financing your business are no longer available. What do you do?
Alternative private lenders are a good option, who can provide you with simple, quick, and easy approval of a revolving line of credit with flexible terms.
It's designed specifically for businesses to access large amounts of money quickly without having to wait months like in a traditional bank for approval.
Typically with a private lender, you can get approved within 24 hours and funded in 2-3 days.
For example, say you’re a commercial real estate developer that is planning for a $50 million development. With a $1 or $ 2 million line of credit at your disposal from an alternative private lender, you can do a number of things to kick off the project right away, even before you start raising any equity or debt capital, such as;
- Purchasing the land
- Pay for any feasibility studies
Instead of going to numerous banks and jumping through all the hoops, like paying additional accounting fees, gathering whatever updated copy of financial documents for every bank plus the months in time it will take before approving any loan amount fit for your business needs. These stringent restrictions make bank funding a constant game of chance. Worst case, all that extra expenses and time just to get a rejection, now further delaying the development project before it gets off the ground.
How else can a $1 million revolving business line of credit allow you to take advantage of opportunities or buffer against uncertainty?
Ways You Can Use $ 1 Million to Grow Your Business and Multiply Revenue
A revolving business line of credit is open-ended, so business owners can use it to sort any business expense and opportunity. It’s crucial if you need quick working capital to run business operations efficiently and maximize production.
You may want to purchase new equipment or technology for your business whether in construction, transportation and logistics, warehousing, or bringing in expertise and experience to help your business grow to the next level.
The flexibility of a revolving business line of credit makes you feel more comfortable taking on perceived financial risks. Or implementing revenue-generating ideas because you have a financial safety net to fall back on to maintain the normal course of business.
Additionally, if you’re in businesses such as ecommerce or fix and flipping real estate, you can always leverage revolving business lines of credit to take advantage of purchasing power for better pricing on bulk purchases and take on more projects.
Here are other ways a $1,000,000 can help your business grow bigger;
- Hiring new employees or higher level expertise and experienced positions to meet the demand of your growing company to helping your business grow to the next level
- Purchasing inventory in preparation for a busy season or simply giving you more purchasing power to lower inventory costs
- Moving to a new location or expanding your working space to increase your brand visibility and access to customers
- Running effective marketing campaigns to understand better your customers and gain their loyalty
- Investing in a piece of new equipment or technology to increase your company’s productivity
- Own the real estate your business operates in for added tax advantages and many more
In other words, a revolving business line of credit is a revenue generating or cost saving resource that any business can take advantage of if utilized properly.
What Are the Benefits of a Business Line of Credit?
There are many benefits that a revolving business line can help expand your business and revenue sales. Here are some of them.
One of the outstanding benefits of a revolving business line of credit is flexibility. Once approved, you can draw the funds anytime your business needs arise and spend on any legitimate business expense at hand. Additionally, the funds you repay will be available to access hence “revolving.”
For instance, say you’re in an automobile and home insurance company. You can use a $1 million revolving business line of credit to expand services, upgrade your technology, or venture into new insurance products that will boost your revenue income.
You Only Pay Interest on What You Use
Another notable advantage of using a business line of credit is that you only pay interest on the amount you use. For instance, if you draw $1 million and use $500K to purchase a high-end combine harvester and an additional $100K for inputs for your corporate farming. That means you’ll only pay interest of $600,000.
On the contrary, term loans require you to pay interest on the whole amount you borrowed. Like in our above example, you’ll pay interest for the entire amount regardless of what you use.
Better Business Credit
It improves credit standing by showing that you can manage your finances responsibly, and it will make it easier and improve your chances of getting better financing for your business in the future.
Lower Interests and Fees
Business lines of credit have lower interest rates and do not have fixed payments compared to credit cards. Consequently, lower rates result in reduced debt burdens allowing your business to increase competitiveness by offering customers favorable terms.
Additionally, some alternative private lenders allow you to repay whenever you want without additional fees. This reduces financing costs and boosts revenue growth.
Another significant difference and benefit that makes revolving lines of credit ideal for most businesses is that it’s endless(sort of). You can spend up to your limit, repay the funds, and it will be available to draw again without repeating the application process.
This means you’ll always have a balanced cash flow and working capital to snatch any business opportunity before your competitors.
What Are the Drawbacks of Getting a Revolving Business Line of Credit From the Bank?
A Complicated Application Process
It may not be routine, but the application process for banks is often challenging and slow but FVVantage can help you speed up the process by atleast 4x.
Therefore, if you need funds in a short amount of time, it is often a sound solution to go with an alternative private lender through a straightforward and simple application process.
How Do You Qualify for a Revolving Business Line of Credit?
Qualification requirements vary by lenders. However, you’ll typically have to meet the following;
Consistent monthly volume and revenue
6+ Months in business
700+ FICO Score
What Are Examples of Businesses That Can Use a Revolving Business Line of Credit?
A business line of credit is open for any business such as;
Utility and energy companies
Commercial real estate developers
Accounting, legal, and consulting
However, this’s just a small list of types of businesses that could take advantage of a business line of credit.
FAQs for a Revolving Business Line of Credit
What Credit Score Do You Need for a Revolving Business Line of Credit?
To maximize the benefits and how much you can qualify for you would want to strive to have a minimum credit score of 700. But ultimately you can qualify with a credit score lower than 700 just to get one on hand and build one up to $1 Million or more.
How Fast Can You Get a Revolving Business Line of Credit?
The business lines of credit funding time vary by lenders. But typically, alternative private lenders approve and fund within 2-3 days.
What Is the Limit of a Revolving Business Line of Credit?
The limit to a business line of credit varies depending on several factors. But typically you will be able to find up to $1 million.