Revolving Lines of Credit

A structured discussion around the business need.

A revolving line of credit is a flexible loan that provides borrowers with access to a predetermined amount of funds. Unlike traditional loans, you can draw from this line of credit multiple times, repay it, and borrow again, as long as the account remains open and in good standing.

A revolving line is drawn, repaid and drawn again as the business needs it. The two things that decide whether it is genuinely useful are what it is margined against, and whether the whole limit is actually available when it is needed rather than only the portion the formula allows that month.

For an electrician bidding larger contracts we arranged a $500,000 unmargined line at prime + 0.75% — unmargined meaning access to 100% of the funds at all times, in an industry lenders usually treat as higher risk, with reduced personal guarantees. For a direct-to-consumer retailer we placed a $3,000,000 line margined at 70% of inventory with no cap on the line's value, at prime + 0.50%, which supported a 40% increase in sales by funding more stock.

Public financing options

Terms and availability depend on the business, transaction, and lender. Publicly described considerations in this area include:

Two questions decide the shape of the facility: what it will be margined against, and the largest amount you would ever want available on a single day.