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We offer operating credit to all types of businesses. This is how a loan through Qred works:
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Operating credit provides businesses with flexible financing to manage day-to-day expenses and improve liquidity, especially during seasonal revenue fluctuations. The company can draw on a credit line as needed, with interest only on the amount used.
This provides flexibility and stable liquidity, but it is important to be aware of costs and the risk of overspending. Used correctly, operating credit supports your company's operational needs and growth.
Operating credit is a flexible financing solution that many businesses use to manage day-to-day expenses and improve liquidity. This type of credit is particularly useful for businesses that experience seasonal variations in revenue or have irregular cash flows. In this article, we'll take a closer look at what operating credit is, how it works, the benefits of using it, and key factors businesses should consider before adopting such a credit solution.
Operating credit, also known as an overdraft or operating loan, is a line of credit that the bank makes available to a business. Unlike a regular loan, where the borrower receives the full amount of the loan immediately and starts paying interest on the entire sum, operating credit allows businesses to draw up to a pre-agreed amount as needed. Interest is only charged on the portion of the credit that is actually used.
When a company establishes an operating credit, a maximum credit limit is set up based on the company's financial situation and needs. The company can withdraw funds up to this limit at any time, and can then replenish up to the limit as they repay used credit. This provides great flexibility in the management of the company's liquid assets.
1. Flexibility: Operating credit allows businesses to manage financial fluctuations without having to take out a fixed business loan every time a temporary need for additional capital arises.
2. Improves liquidity: It helps businesses maintain a stable liquidity even during periods of variable earnings.
3. Pay only for what you use: Unlike traditional loans, where interest is paid on the entire loan amount, businesses with operating credit pay interest only on the portion of the credit that is in use.
1. Costs: It is important to be aware of all the costs associated with operating credit, including interest rates, set-up fees and any annual maintenance fees.
2. Risk of overspending: While flexibility is a great benefit, it can also be tempting for businesses to become too reliant on their credit, which can lead to financial problems.
3. Collateral requirements: Some banks require collateral to offer operating credit, which may include real estate or other valuable assets.
Operating credit is a very useful tool for businesses that need flexible access to capital to manage current expenses and maintain good liquidity. By only paying interest on the amount actually used, businesses can effectively control their financing costs. However, it is important that businesses carefully assess their financial needs and risks before establishing such a credit facility. Used correctly, operating credit can be a crucial tool to support a company's operational needs and growth opportunities.
Founded in 2015 by entrepreneurs for entrepreneurs, Qred offers Norwegian business owners a new and different option for business financing. Today, Qred is the market leader in the Nordics, something we are very proud of.
We launched our services in Norway in 2022 and have helped thousands of Norwegian entrepreneurs. Our friendly and experienced team understands the challenges and needs of business owners, and we are proud to be one of the highest-rated business lenders on Trustpilot.
We help you find the best solution for your business.
Kristina is responsible for the Norwegian market and has a broad background in banking and finance with over 5 years of experience at Nordnet. She has a bachelor's degree in Marketing and Management from Inland Norway University of Applied Sciences. Kristina helped start up the Norwegian market from scratch in January 2022.
