When we need a quick injection of money, usually the first thought is a cash loan. However, it is worth knowing that banks also offer other sources of financial support. Most of us have our own savings and settlement account, which gives many possibilities. One of them is a revolving loan. What is this? How does it work and who offers such a solution?
What is a revolving loan?
As you know, various situations happen in life. Therefore, it is worth having knowledge about the available solutions to be slightly prepared for various circumstances. Let’s move on to explaining what a revolving loan is. We mentioned at the beginning that it is associated with the current account. But what next?
Submitting a request for a revolving limit and then receiving a positive credit decision adds a specified amount of cash to your account balance. Depending on our needs, it can even be PLN 100,000. At the same time, we must remember to demonstrate adequate creditworthiness. This means that we have a larger budget than the actual account balance. How it’s possible?
The granting of a renewable limit allows us to use an additional pool of money. When an unplanned expenditure appears in the household budget, we do not have to worry about applying for a loan or credit, because we can always use the limit available on the account. It remains available throughout the duration of the contract and we can use it many times. The revolving loan is granted for 12 months, if during this time we do not exceed the limit and ensure regular debt repayment, then the bank automatically extends the contract for another year.
However, any cash withdrawal obliges us to return the money within a specified period. What is the repayment of the renewable limit? If a withdrawal or other funds reach our account, the loan will be automatically repaid. Therefore, you should ensure regular receipts for your account to avoid long-term accrual of interest.
Credit line – how much does it cost?
As you know, every credit or loan carries some costs. The same goes for the credit line. Looking at the PKO revolving loan offer, we learn that the fees associated with such a commitment include: commission, interest and account maintenance fee.
It is also worth following promotions offered by banks. This way you can save extra money without paying a commission for granting a loan or keeping an account.
However, we do not have to worry about too high costs, because interest will be calculated only on the amount used. If in the given period we did not use the limit, then the interest will amount to PLN 0. It is also worth mentioning that if the PKO’s revolving limit is PLN 2,000 and we have our own funds in the amount of PLN 2,500, then all transactions are covered first of all from the account holder’s money, and only when they are exhausted it is time for a revolving limit.
How can you use the renewable limit?
The renewable limit is available to us throughout the duration of the contract. It is worth remembering that the money can be used for any purpose. The money is part of our account balance, and thus it is allowed to perform the same actions as for other funds on the account. This means that you can:
- making transfers,
- withdrawals at ATMs,
- and non-cash transactions (using the card assigned to the account).
Business credit line – 2019
The above information relates primarily to the offer for individual customers. However, banks also offer a renewable limit for entrepreneurs. In this situation, the method of operation remains unchanged, but the available parameters and the form of repayment differ. Products for companies require the applicant to secure a liability. Of course, you can find bank offers exempting from such a necessity. However, you should take into account limited access to the maximum amounts. For example, customers who submit an application for an unsecured limit can count on a maximum of PLN 200,000. In turn, liability protection allows access to up to twice the amount.
What can be a collateral for a credit limit for companies? The first option is to establish a mortgage on your personal or commercial property. This means that in the event of a default, the bank has the right to satisfy its claims. The second solution is to have a de minimis guarantee of Bank Gospodarstwa Krajowego. If we are unable to pay back the loan on time, the undertaking will take over the guarantee. In this way, the company is obliged to settle its debt towards BGK, and not the original institution.
A revolving loan for companies and individual clients
A business credit line is a product that can be used by people who have been running a business or freelance for at least 12 months, civil law partnerships, partnerships and partnerships of natural persons, a court bailiff or entities that do not settle accounts in the form of full accounting. In addition, the duration of the contract in the case of a credit limit for companies is not 12 months, or even 20 years. It is also worth noting that the funds obtained in this way must be allocated to the objectives of the business. It can be, for example: purchase of real estate or repayment of current liabilities towards other institutions or contractors.
Working capital loan for new companies – how does it work?
A revolving loan for new businesses enables entrepreneurs to get extra money for day-to-day operations. Thanks to it, we can ensure financial liquidity of the enterprise and cover overdue liabilities to contractors. Depending on the bank, it can take different forms, one of which is a revolving loan. However, when choosing an offer, pay special attention to the terms of the award. In this way, we will avoid confusion and submit an application in a standard formula for companies operating for at least 12 months. Undoubtedly, finding a revolving loan for new businesses can be difficult. That is why it is worth getting acquainted with other solutions.
Corporate loans can only be used for purposes related to your business!
One of them may be an investment loan, i.e. financial support for further business development. When applying for such a commitment, we need to know what the money will be used for. Then document your plans and their implementation after the investment. Banks usually require new companies on the market to provide additional collateral, which reduces the risk of non-payment of liabilities and reduces interest rates.
How to apply for a revolving loan?
The first thing to keep in mind is having a current account with the institution where we plan to submit an application for a revolving limit. If we meet this condition, please complete the appropriate form online or in the bank’s application (when it exists). Then we wait for the bank’s response and choose the way to sign the contract. We can do it online, in the branch or in the presence of the courier. After signing the documents and providing them to the institution, the renewable limit will be activated. Let us remember, however, that inference differs depending on the internal rules of each bank.