Advantages of a Revolving Line of Credit

Advantages of a Revolving Line of Credit

Advantages of a Revolving Line of Credit

Businesses often have unexpected capital needs. Small businesses have fewer avenues of funding these needs. Most MSME’s in India face challenges in accessing funds from traditional avenues since they are considered high-risk borrowers. This lack of access to credit affects the business’s growth and ability to contribute to the economy. 

Alternative sources of credit like a Revolving Line of Credit offer several advantages to such small and medium enterprises since they come without any security and offer quick temporary liquidity. This type of a loan offers businesses the option of quick access to credit without going into debt.

What are the advantages of the Revolving Line of Credit?

  1. Flexible repayment – A business may have a temporary urgent need for funds. A revolving line of credit offers this quick access to credit with the flexibility to borrow and repay repeatedly. 
  2. Immediate access to funds – Revolving Line of Credit is one of the fastest funding options available. Connected through embedded technology, business owners can now apply for a line of credit and access their funds in a matter of hours.  
  3. Improve your business’s credit score – Making timely payments on your line of credit has a positive impact on your company’s credit score. This helps in increasing your credit limit in the long run, making it easy to access funds in the future.
  4. No collateral needed – A revolving line of credit is an unsecured loan. This means you do not need to leverage any real estate as collateral. 
  5. Higher Control= Lower Cost of Capital – The flexibility that the revolving line of credit offers makes it easier to control how much money one wants to draw. This means you need not worry about over borrowing.
  6. Pay for only what you use – Unlike other options of credit, you do not have to pay for the total line of credit you are eligible for. You pay interest on only what you have borrowed while having the security of funds available when you want them. 
  7. Grow your credit line as your business grows – Banks take a rigid and slow approach to expanding credit lines as requested by business owners. Fortunately, our revolving credit lines are constantly being reviewed in order to qualify business owners for credit line growth as their business grows.

The Bottom Line

A revolving credit is a credit line that can be a valuable financial tool to help you pay for things. If you use it responsibly, you can build your credit score and potentially enjoy rewards like cash back or travel points. Like other credit instruments, it is important to use the line of credit for revenue generating purposes and be responsible. If you have a revolving credit line, be sure you make minimum payments on time, or your credit score could suffer.

MyShubhLife provides effective plans of revolving line of credit that can be availed by customers from our partner companies depending on their requirements (Fino Payments Bank, PayWorld, MobiKwik, Easy Pay and Spice Money). There is a daily and a weekly revolving line of credit that can range from Rs.3000 – Rs. 5,00,000 to be utilized for your needs.

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