Having access to funds when you need them through a revolver finance option can mean the difference between business growth and failure.
What is a Revolver Line of Credit?
A revolver finance solution or line of credit is also called a revolving credit facility. It’s a line of credit a business can access at any time. You may also hear it referred to as an operating line, bank line, or a revolver. It’s a way for businesses with limited cash flow to access capital quickly when they need it.
Let’s start by wrapping our heads around some features of revolver finance:
- Cash sweep. This provision allows for any cash flow generated to be applied to the outstanding balance. It can be a handy tool to streamline debt reduction and keep credit risks at bay.
- Interest expense. Here’s the beauty of a revolver: you’re only charged interest on the cash you’ve withdrawn, not the entire credit line. It’s like paying rent only for the space you occupy, not the whole building, a win-win for savvy borrowers.
- Maximum amount. Every revolver comes with a borrowing cap, a limit based on factors like financial stability and creditworthiness. This cap serves to keep you in check and prevent you from going into more debt than you can reasonably pay back.
Benefits of a Credit Revolver
A revolver isn’t just another tool in the financial toolbox. It’s the Swiss Army knife of cash flow management. Here’s why:
- Flexibility. Need funds in a pinch? Revolvers have your back. With easy access to cash whenever you need it, you can bypass financing approval processes for large purchases.
- Steady cash flow. No matter what ups and downs come your way, you’ll always have a lifeline of easily accessible cash flow to keep your business bills paid.
- Credit management. Revolvers aren’t just about borrowing. They’re about borrowing smart. By giving you the power to access funds when you need them and pay them back on your terms, they help you stay ahead of the credit curve and minimize interest costs.
Let’s take a closer look at the different types of revolvers available.
Types of Revolving Credit
Revolvers come in two distinct options, based on your company’s existing assets and credit worthiness:
- Secured revolver loan. Looking for lower interest rates? Consider a secured revolver, where you put up collateral, like property or equipment collateral, to secure the loan. It’s like getting a discount for being a responsible borrower.
- Unsecured cash flow revolver. Don’t have collateral to spare? With an unsecured revolver, you can still access funds, albeit at slightly higher interest rates.
Revolving Credit vs. Installment Loan
Choosing between revolver finance and installment loans is like deciding between a buffet and a set menu. Here are the major differences:
- Adjustability. Revolvers are like a buffet—you can pick and choose what you need when you need it. An installment loan is more like a set menu—you get what you get, no substitutions.
- Repayment structure. With a revolver, you call the shots on repayment. Need more time? No problem. With installment loans, it’s a fixed schedule. You pay what you owe when you owe it.
In a nutshell, revolver finance is your ticket to reliable and effective cash flow management. For any business, at any point in its growth cycle, a revolver can be a resource that helps you grow your business with readily available capital, right when you need it most.
Need to Know More? We Can Help.
If you’re looking for an infusion of easily accessible cash for your business, talk with your regional Equify Financial sales manager to learn more about an equipment revolver and other cash infusion options. We’re ready to help you find the right financing solution for your company. Let’s talk!