Alternative funding for business: revolving credit
By Jonathon F|
March 27, 2023
Given just how cumbersome and slow traditional funding channels can be, more and more SMEs are researching alternative funding for business. And why wouldn’t they? If the Minister of Finance’s budget speech and the President’s State of the Nation Address told us anything this past month, it was that South African SMEs are the engines of the local economy. But if the engine cannot refuel quickly enough, it goes kaput – even in a fuel-abundant economy.
Following the metaphor? It’s not as if there’s a shortage of business funding solutions available to SMEs. But smaller businesses are more vulnerable to disruptions in cash flow than larger enterprises. Most don’t have the cash reserves to survive the inevitable gaps where the business’s income and expenses do not overlap. Bridgement is here to bridge those gaps.
You can consider your Bridgement credit facility as a revolving loan. If you aren’t too sure what those terms mean, don’t sweat it – we’re about to break it down for you in a guide to alternative funding for business. It’s quick and easy, just like our funding solutions. We’re consistent like that.
What is a credit facility/revolving loan?
Basically, a credit facility (also called a revolving loan or revolving capital) gives businesses instant access to a line of credit without having to reapply and wait for business financing every time they need it. Once you’ve been approved for your facility, you can use it (or not use it) as many times as you see fit. It’s a little bit like having a pre-approved business loan in your back pocket at all times.
Revolving credit facilities also differ from traditional loans in the sense that you don’t need to go through a different application process every time you need business funding. Like with any revolving credit facility, you’ll just need to update your financial information from time to time so that the credit limit is always attainable. But once the business qualifies for a revolving credit facility with Bridgement, you can use it for a multitude of business expenses and growth opportunities.
It’s a super flexible financing solution that lets you withdraw, repay, and withdraw again. This form of alternative funding for business is a great option for growing South African SMEs because it’s simple, fast, and flexible.
We’ve applied the concept to a fictional example so that you can see how this works in real terms.
How a revolving credit facility works in real life
Let’s say that Happy Hops, a local brewery, secures a revolving loan facility with Bridgement for R3 million. Like many of Bridgement’s clients, Happy Hops uses its facility to take on bigger projects and take the business to greater heights.
When another company signs a R1 million contract for Happy Hops to supply them with their lager for the next three years, the brewery uses R500 000 of their facility to purchase new machinery and expand their brewing capacity to meet the demands of the contract. With the facility, they can take on bigger projects with longer repayment terms. In this way, Bridgement is useful for the long-term growth trajectory of the company.
Alternative funding for business vs. traditional funding
So, how do you know if you should pursue alternative funding for business or if you should stick to traditional financing channels? It really depends on how much time you have to spare before the engine runs out of fuel, so to speak.
Traditional lenders also offer working capital solutions like overdrafts. But applications for business financing from traditional lenders like banks can take weeks to complete and months to be approved (if you are approved at all, that is). You can always appeal to an angel investor or a venture capitalist, but they require their own complex application processes. Moreover, you may have to exchange equity for this kind of funding – and equity is more expensive than debt.
To put it into simpler terms, here’s a quick overview of what you get with traditional financing versus alternative funding for business.
|Complex application procedures, which often incur an application charge.||A free, online application which takes less than two minutes to complete.|
|Take weeks to compile financial projections, business plans, and other documents to submit for a lengthy review process.||Submit your accounting or banking data through Bridgement’s secure online application portal for a speedy review process. Get approved for a facility in as few as 24 hours.|
|Incur an early settlement penalty when you pay off your facility sooner than expected.||Receive a discount for settling early.|
|Hidden fees and charges at multiple stages of the journey.||Always know the exact cost before you agree to anything – no hidden fees, ever. You’ll only pay for what you use. |
Considering how long it can take to be approved for a credit facility with a traditional lender, this option is not always well-suited to SMEs who need rapid funding approval to scale rapid growth. The wait is certainly not for the faint of heart. Having a revolving credit facility on hand offers peace of mind that goes a long way for leaders of growing businesses.
How does alternative funding for business work with Bridgement?
Bridgement offers a number of different credit facilities to suit different business needs. Applying for your facility will look a little like this:
Step 1: Apply
Apply for your Bridgement facility online. It takes two minutes and costs nothing to apply. You can connect the data from your accounting package or submit your financial information via PDF for a quick, easy, and secure application. During our lightning–fast application process, we’ll review your banking or accounting data to determine the limit on your credit facility.
Step 2: Get approved in record time
Once your application is approved (usually within 24 hours), you can access your Bridgement dashboard online. You can draw down as much as you need from your facility up to your approved limit, whenever you need it.
When you withdraw funds from the facility, the funds typically land in your bank account in a matter of hours – business hours of course.
What did we tell you? Record time.
Step 3: Enjoy full transparency
You can see right through us, and that’s a good thing. We charge a single, simple fee per withdrawal. You’ll always know the exact cost of your facility with Bridgement, and you’ll only ever pay for what you use.
No application fees, no monthly fees, and no early settlement penalties. In fact, we’ll give you a discount for settling your account early. We’ve even got a free loan repayment calculator which gives you an idea of how much your facility with us would cost.
Who qualifies for a Bridgement facility?
There are a few factors which qualify businesses for a Bridgement facility. In order to be considered, businesses must:
- Be a registered company or a close corporation in South Africa
- Have an annual turnover exceeding R500 000
- Have a trading history of at least 6 months
With a Bridgement facility at your disposal, you’re in a better position to accelerate growth and capitalise on new opportunities. You can also use your facility to improve cash flow and save on business financing with early settlement discounts.
Don’t delay the business’s growth any longer
Whether you’re looking for a business loan, a line of credit, or invoice finance, Bridgement has an array of solutions to nurture the growth of your SME. Our credit facilities are designed to grant you quick and simplified access to funding.
Business opportunities wait for no one. The only way to be prepared is to stay prepared with instant access to business financing, whenever you need it. Apply for a prosperous future. Apply for up to R5 million in business funding with Bridgement.
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