Why a business line of credit instead of a traditional overdraft? Quite simply, if you’re an SME, organising an overdraft with a bank can be a fraught and frustrating process, and once secured, an overdraft can be retracted with no notice.
Simply getting approved can be an ordeal, and even if you succeed, there’s no guarantee that you’ll get as much contingency finance as your business requires. Between 2011 and 2016, collective overdraft values fell by 42 per cent (banks lent SMEs £20.9bn in April in the form of overdrafts vs £12.1bn in March 2016).
If you do manage to secure an arrangement that meets your requirements, you’re far from out of the woods. Overdrafts can be reduced or removed with minimal notice: according to figures from the Bank of England £5m worth of SME overdrafts are removed every day. Worse still, it doesn’t particularly matter what your circumstances are: even if you’ve repaid everything diligently and in good time, economic movement, administrative banalities, or sheer whim can lead to sudden withdrawal.
If you’re a business owner relying on this source of unsecured finance to get you from month to month, sudden loss of an overdraft can be an unwanted shock to the system.
Business line of credit vs bank overdraft
At Nucleus Commercial Finance, our Nucleus Overdraft ID
product functions as a business line of credit rather than a traditional overdraft.
If you’re interested in a secured business line of credit, we’ll typically arrive at a decision within 24 hours of first contact, and will usually pay out within 72 hours – assuming you have your documentation in order and are willing to submit to a credit check. Should your application be approved, you’ll have access to a limit that is set at 75 per cent of your outstanding ledger balance – with no minimum fees or service fees. Contra most overdrafts, this isn’t fixed: your limit grows with your ledger up to a maximum of £100k.
As a confidential revolving credit facility, you will also retain full control over collections. Unlike many banks, we believe it’s counterproductive to punish clients for not using our services – you make interest and capital repayments on what you use, and not a penny more. There is a three per cent arrangement charge and a one per cent charge for renewal, but no further fees.
Crucially, we also make sure that our line of credit is offered on a six-month rolling contract: whatever our circumstances, and whatever outside circumstances might influence events, your Nucleus business overdraft
will remain firmly intact.
At Nucleus, we pride ourselves on being business enablers and business partners to our clients: we can’t reasonably expect scrupulous honesty and fairness from you if we don’t demonstrate it ourselves.
We offer a level of experience and pedigree that is rare within the alternative finance industry. Our team is drawn from all corners of the sector, and combines the flexibility of a P2P lender with the raw funding power of a conventional bank: opening a business line of credit certainly doesn’t preclude you from using our other financial products including our secured business loans
services, cash flow finance, traditional invoice finance
, asset funding
, and construction finance