A type of revolving credit is particularly useful for operational purposes, particularly for businesses that experience large fluctuations in cash flow and higher-than-expected expenses. In other words, it is necessary for companies that sometimes have low cash resources to support their net labour capital on labour capital (NWC). It is a measure of a company`s liquidity and ability to meet its short-term obligations as well as the financing of its operations. The ideal position is to meet the needs. For this reason, it is often seen as a form of short-term financing that is usually quickly paid. It is an agreement that allows the amount of the loan to be recovered in one way or another until the agreement expires. Credit card loans and overdrafts are revolving loans, also known as non-independence loans.  One of the most important differences between a revolving credit facility and a commercial credit card is that institutions are generally not equipped with payment cards. Therefore, instead of buying shares (z.B.) directly with a credit card, the funds are transferred to your commercial bank account. The borrower`s interest is calculated only on the basis of the amount of the payment and not on the entire line of credit. The rest of the revolver is always ready for use.
This feature of built-in flexibility and comfort is what gives the revolver its main advantage. With respect to the remaining balance to be liquidated, a company may be able to pay the full amount at once or simply pay monthly minimum payments. One of the advantages of a revolving credit facility is that the approval rates are relatively fast. One of the things that entrepreneurs appreciate most about revolving credit facilities is how quickly they can be implemented. Automated credit decisions and integration with accounting software mean that credit decisions are made immediately for certain sectors. For some lenders, it is even possible to draw money on the same day as the application. Renewable credits imply that a company or individual has been previously authorized for a loan. A new application for credit and a revaluation of the credits do not need to be concluded with each revolving credit absorption authority. Renewable credits are for short- and small-scale loans. For large loans, financial institutions need more structure, including installation payments. Another advantage of credit lines is that they do not require a security or investment assessment – your business follows an application process, and once the facility is implemented, you can use it until the agreement is updated or amended.