Revolving Line of Credit

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  • Finance up to $750,000
  • APR starting at 7%
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Revolving Business Line of Credit

Flexibility to access working capital whenever a business need arises.

What Is a Revolving Line of Credit?

A revolving line of credit lets business owners like yourself borrow money, pay interest only on what you borrow, and continue to borrow up to your credit limit. The credit limit is typically based on the borrower’s credit score, income, and time in business.

With this type of loan, a lender issues the borrower an account with a set credit limit. You only pay interest charges on the amount you withdraw. And you can repay and withdraw funds without going through another loan approval process as long as you pay the minimum payment regularly.

The revolving line of credit remains open until either the lender or you decide to close it. You can use the funds at your discretion — to tend to any business needs. It offers flexibility for business owners who want more options with managing and using capital.

Personal lines of credit, business credit cards, business lines of credit, and home equity lines of credit (HELOC) are examples of revolving lines of credit. Also called an open-end credit, a revolving line of credit makes it easy to make purchases or withdraw funds.

Advantages of a Revolving Line of Credit

Revolving lines of credit are a lifeline to many business owners. Ultimately, it’s a safe and relatively stress-free loan. So, here are a few more benefits of securing a revolving line of credit.

Builds Your Credit Rating

A revolving credit line is a great way to build a credit history for your business. Aside from having a good credit report, lenders also like to see that you can manage debt properly. This means you pay your balances on time. And if you don’t withdraw the maximum amount, it keeps your credit utilization rate low, which increases your credit score.

High Approval Rates

Revolving lines of credit have high approval rates. So, no matter what industry you’re in, the chances are good that you can secure a credit line. Of course, excellent and good credit scores are preferred, but there are loans available for poor credit as well.

Flexible Financing

One of the main advantages of revolving credit is its flexibility. You have access to a line of credit that’s already approved and available. You can simply withdraw at any time for any reason. This is why many small businesses depend on revolving credit to manage their cash flow gaps.

Competitive APRs

Revolving lines of credit typically have lower interest rates than credit cards. And compared to a short-term loan, you only pay interest on funds you withdraw. In this case, a revolving credit line is an affordable option if you need funds to manage day-to-day business expenses.

At Clarify Capital, we work with more than 75 lenders to get you the lowest APR available. You also have access to a dedicated Clarify advisor to help you choose the best business loan for your needs.

Quick Access to Capital

A revolving line of credit helps you cover unexpected expenses, such as the cost of replacing broken equipment. It provides quick access to capital whenever you need it. This is why business owners who want peace of mind plan ahead and apply for a revolving credit before they need it.

No Prepayment Penalties

With a revolving credit line, you can repay the money back at your own pace (as long as you pay the minimum) so that you don’t put your business into financial hardship. And when you finance with Clarify Capital, there are no fees for prepayments.

We also make sure you understand the terms and payment schedule of your loan. A Clarify advisor will walk you through the application process so that you can choose what works best for your business.

What Is a Revolving Line of Credit Used For?

Companies use a revolving line of credit to take care of various business needs. Here are a few examples of how small business owners use this type of credit to grow their brands.

Seasonal Fluctuations

Most businesses go through high and low sales seasons depending on their industry, product, or service. So, having a revolving line of credit is a reliable way to cover cash flow gaps and keep the business operating even when sales are low. Having access to extra cash is also helpful when your business needs to buy more inventory during peak seasons.

Expanding Business Locations

An expansion of any kind is an exciting time for business owners. Opening a new location can also be stressful because there are many moving parts, some of which you may not have accounted for. In this case, a revolving line of credit can help you smooth things out to avoid delays.

Hiring Employees

Not having enough employees to attend to customers or make products can slow a business’s growth. But what if you don’t have room in your budget to hire employees? Secure a revolving line of credit and have access to funds that let you invest in the right people when the need arises.

Buying New Equipment

Buying new equipment can be a huge capital expense. But you need materials, machinery, and inventory to fulfill orders and grow your business. With a revolving credit line, you can buy a piece of new equipment and still have money for other operating expenses.

Invoicing Gaps

Businesses that sell on credit often experience cash flow gaps when waiting for customers to pay invoices. And for startups and new businesses, payments coming in on time are crucial. There’s nothing worse than waiting for late payments when you have bills to pay yourself.

Secure a revolving line of credit and have access to immediate cash when you need it. It helps you deal with the worst when it happens. And it makes you feel more in control of your business when you can pay your bills on time no matter what.

Who Is a Revolving Line of Credit Ideal For?

A revolving line of credit is ideal for business owners looking for a flexible financing option. With a credit line, you borrow and repay the funds as many times as you need. It works best for companies that need short-term business financing regularly, such as seasonal businesses.

The type of loan you should get depends on your business needs as well, such as if you need access to cash to cover working capital expenses as they arise. So, if you want to avoid having to apply for financing every time you need cash, a revolving line of credit is the way to go for your business.

But if you want to make a large one-time purchase, maybe a short-term business loan is a better solution. With a short-term loan, you receive a lump sum. You repay the loan amount plus interest in equal monthly payments over a period of time until it’s paid off.

How Do You Qualify for a Revolving Line of Credit?

To qualify for a revolving line of credit, most lenders require businesses to have a strong revenue, a good credit score, and be operational for at least six months. Since Clarify Capital works mostly with online lenders, we have less strict requirements than traditional loans from banks and credit unions.

To prepare for your loan application, make sure to check your credit score and get the following documents ready:

  • Legal proofs, such as a driver’s license, passport, federal tax ID, or employer identification number (EIN)
  • A copy of your business license or DBA
  • Most recent bank statements (3 to 6 months)
  • 1 to 2 years of business tax returns
  • 1 to 2 years of personal tax returns
  • Financial statements, such as profit and loss (P&L) statements and balance sheets

Note that every lender has different requirements, interest rates, and repayment terms. Loans can also be secured credit or unsecured credit. Some revolving credit lines can be secured to guarantee approval or lower interest rates. And lenders may ask for collateral in the form of inventory, equipment, or real estate.

Speak to a Clarify advisor for more information or submit an online application to see your funding options for free.

Top Use Cases for Revolving Credit Line:

A revolving line of credit allows you to manage business costs as they come up. Below are popular ways business owners use financing to achieve their goals:

Unexpected Expenses:

Having flexible access to funding keeps you prepared for whatever life throws your way. Pay for one-time, unanticipated costs as they arise using your business line of credit.

Inventory:

Place buying orders and get the supplies you need to achieve success. An infusion of working capital at your disposal allows you to make forward-looking business choices.

Operational Costs:

Free up additional working capital to be used where you need it most. Flexibly withdraw funding, so you can ensure your regularly occurring bills are paid on time and in full.

Coronavirus Assistance:

The COVID-19 pandemic has disrupted the business ecosystem, disproportionately affecting small businesses. A revolving line of credit can be used as a lifeline when you need it most. Smooth over cash flow and tap into funds on an as-needed basis during these unprecedented times.




Frequently Asked Questions about Revolving Lines of Credit


A revolving credit line is a type of financing where a fixed amount of credit is extended to a business to be paid back over time. It allows you to withdraw and repay funds as you go, up to your borrowing limit. Once you pay back the amount owed, the limit resets, and capital becomes available to you again.
Lenders give businesses access to a pool of funds to address any business costs. Revolving credit can be secured and unsecured, depending on the situation. Borrowers don’t need to pay interest on the total credit extended - interest is only incurred on whatever capital is used.
With revolving credit, you’re extended a certain amount of credit and can keep borrowing until you hit the credit limit. The credit renews as you pay off debt and there are no fixed payments. With installment credit, you borrow a fixed amount and make regular, scheduled payments towards the loan, until it’s paid off in full.
A revolving line of credit is similar to a line of credit in almost all aspects, except one key differentiator. A revolving line of credit replenishes after you pay back some of the borrowed funds. As you pay off used credit, more credit becomes available. Non-revolving credits do not replenish after a payment is made. Paying down the non-revolving credit line decreases the total amount owed, but does not result in more funds becoming available.
Credit cards, business credit lines, and home equity lines of credit (HELOC) are all forms of revolving credit.

Types of companies we've offered lines of credit

Approval requirements

  • keyboard_arrow_right Have been in business for over 6 months
  • keyboard_arrow_right Generate at least $10,000 per month in revenue
  • keyboard_arrow_right Can provide last 3 months of bank statements

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When you choose Clarify, we consider you family -- and work with you through the ups and downs of running your small business.Manufacturing Financing Team

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"I have worked with Clarify Capital to secure multiple loans for my company of the past few years. They are professional, trustworthy and efficient in all of their work. They overcame obstacles to get my company the funding they needed to continue our growth. The funding allows me to buy raw materials at a discount, improving my profitability."

Stephanie
Toy Manufacturer
New Jersey
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