Your borrowing need
- Maximum credit limit required
- What the facility is for (working capital, seasonal cash flow, stock, one-off costs)
- Expected drawdown pattern (regular use or occasional)
- Whether you have assets to offer as security
Revolving credit facility
Compare revolving credit facilities from a panel of UK lenders. Pre-agreed credit limit, draw and repay as needed, only pay interest on what you use.
- Pre-agreed credit limit, draw and repay on demand
- Interest charged only on the funds you use
- Also known as an RCF, revolving credit line or revolving line of credit
- Independent commercial finance broker
Last updated: June 2026
What is a revolving credit facility?
A revolving credit facility, often shortened to RCF, is a pre-agreed line of credit a business can draw against, repay, and draw again, up to an agreed maximum limit. You only pay interest on the funds in use, not on the total limit available.
The product is also known as a revolving credit line, a revolving line of credit, revolving finance, or simply a credit line. The terminology varies between lenders but the structure is the same.
For example, a business with a £100,000 revolving credit facility could draw £40,000 to cover a stock purchase, repay it over two months, and then draw a further £60,000 to bridge a VAT bill. Interest is charged on the drawn balance only. As repayments are made, the available limit replenishes.
How a revolving credit facility works
Five steps from agreeing a limit to drawing funds on demand.
- 01
Apply for a facility limit
Agree a maximum credit limit with the lender based on your turnover, trading history and security available.
- 02
Draw funds as you need them
Draw all or part of the limit at any time. Funds are transferred to your business bank account, usually within 24 hours.
- 03
Pay interest on the drawn balance only
Interest is charged daily on funds in use, not on the full facility limit. A non-utilisation fee may apply on the undrawn portion with some lenders.
- 04
Repay on flexible terms
Repay in part or in full at any time, subject to your agreement. Repayments are typically monthly, but some facilities allow weekly or daily.
- 05
Redraw as the limit replenishes
As you repay, the available limit replenishes. You can keep drawing and repaying throughout the term without reapplying.
What you'll need
A few details up front let us match you to lenders faster and shape the right facility.
Your business
- Companies House number and trading name
- Date of incorporation and length of trading
- Annual turnover and sector
- Last 6 months of business bank statements
- Most recent year-end accounts, or management accounts if newer
Director and security information
- Director names and home addresses
- Whether directors will provide a personal guarantee
- Any specific assets available as security (property, equipment, debtors)
We do not run a credit search at the enquiry stage. A formal search happens only once you accept a lender's offer.
Common uses of a revolving credit facility
Different businesses use revolving credit for different cash flow patterns. These are the most common.
- Working capital and cash flow
- Bridge the timing gap between supplier payments going out and customer payments coming in. Useful for businesses on 30 to 90 day customer terms.
- Seasonal cash flow swings
- Cover predictable peaks and troughs in trading, such as Christmas stock purchases, summer wind-downs, or year-end tax bills.
- Stock or inventory purchases
- Take advantage of bulk discounts, place larger orders ahead of peak demand, or hold extra stock without tying up cash reserves.
- Tax bills and one-off costs
- Smooth out lumpy outgoings like quarterly VAT, annual corporation tax, equipment repairs, or unexpected supplier deposits.
Revolving credit facility vs term loan vs business overdraft
The three most common ways UK SMEs cover short-term funding needs. They look similar but suit different situations.
| Feature | Revolving credit facility | Term loan | Business overdraft |
|---|---|---|---|
| How funds are drawn | Draw, repay, redraw up to a limit | Lump sum advanced upfront | Linked to your bank account |
| Interest charged on | Funds in use only | Full balance | Funds in use only |
| Typical facility size | £10,000 to £500,000+ | £1,000 to £50,000,000 | £1,000 to £250,000 |
| Typical term | 6 months to 2 years (renewable) | 1 to 7 years | Rolling, no fixed term |
| Tied to bank account | No | No | Yes |
| Best for | Recurring short-term cash flow | One-off purchases or refinancing | Day-to-day overspend buffer |
| Typical setup fee | 1% to 5% of limit | 1% to 5% of loan | Often nil |
Indicative ranges. Actual terms depend on your business profile, security available and lender.
Is a revolving credit facility right for your business?
Revolving credit suits limited companies with recurring short-term cash flow needs and a trading history.
-
You are a limited company
Revolving credit facilities are generally only offered to limited companies, LLPs and PLCs. FundingLinks does not arrange them for sole traders.
-
You have trading history
Most lenders want at least 12 months of filed accounts or management accounts.
-
Your annual turnover is over £100,000
A common minimum for committed facilities. Smaller facilities may be available below this.
-
You have recurring short-term cash flow needs
Revolving credit suits businesses with cyclical or unpredictable cash flow rather than a single one-off funding need.
-
You can support a personal guarantee
Most directors will be asked to provide a personal guarantee, particularly for unsecured facilities.
Pros and cons of a revolving credit facility
Flexibility is the main draw, but it comes at a cost. Weigh the trade-offs before committing.
Pros
- Interest is charged only on funds in use, not the full limit
- Funds replenish as you repay, with no need to reapply
- Faster to access than a new loan application each time you need cash
- Useful for short-term, recurring or unpredictable cash flow needs
- Often available unsecured for established businesses
Cons
- Interest rates are typically higher than secured term loans
- Arrangement fees and non-utilisation fees can add to the total cost
- Most lenders require a personal guarantee from directors
- Usually only available to limited companies
- Not suitable for long-term funding, where the higher rates make it expensive over time
How much does a revolving credit facility cost?
Revolving credit facilities have several cost components. The headline interest rate is not the full picture.
Interest rate
7% to 25% p.a.
Depending on whether the facility is secured, your business profile and the facility size. Interest is usually calculated daily on the drawn balance, so you only pay for funds in use.
Arrangement fee
1% to 5%
A one-off fee, typically a percentage of the agreed credit limit, charged when the facility is set up.
Non-utilisation fee: Some lenders charge a fee on the undrawn portion of the limit, typically 0.5% to 1.5% p.a. Not all facilities have this.
Renewal or review fees: Many facilities are reviewed annually. A small renewal fee may apply.
Secured facilities also incur valuation and legal costs. Exact pricing depends on facility size, security available, your credit profile, and how much of the limit you typically draw.
How FundingLinks finds your revolving credit facility
We help you compare the market without sending your details to unsuitable lenders.
- 01
Tell us what you need
Share your business details, expected facility size and how you plan to use it.
- 02
We compare lenders
We compare offers from 100+ UK lenders, including specialist revolving credit providers, challenger banks and high-street lenders.
- 03
Choose the right offer
Review the options and choose the facility that fits your cash flow pattern.
- 04
Draw funds
Once approved, the facility is in place and you can draw funds as needed, often within 24 hours of a drawdown request.
Why businesses choose FundingLinks
Specialist support for UK SMEs looking to compare revolving credit and working capital options.
- 100+
- UK lenders compared
- 500+
- SMEs funded
- 35+ years
- Combined commercial finance experience
Whole-of-market panel
100+ UK lenders, including high-street banks, challenger banks, specialist lenders and alternative finance providers. We are an independent broker, not tied to any single lender.
Specialist, founder-led support
Founded by Sam Wells and Chris Findlow, with 35+ years' combined experience in commercial finance. You speak to specialists, not a call centre.
Clear process, secure portal
Track your enquiry, review lender offers and exchange documents in one secure portal. No email chains, no spreadsheets, full visibility from enquiry to drawdown.
Free to compare, success-based fees
No upfront charge to use FundingLinks. Fees apply only if you proceed with a facility, and they are agreed in writing before you commit.
Revolving credit facility FAQs
Direct answers to the questions business owners usually ask about revolving credit.
What is a revolving credit facility?
A revolving credit facility is a pre-agreed line of credit a business can draw against, repay, and draw again, up to an agreed maximum limit. You only pay interest on the drawn balance, not the full limit. It is often called an RCF, a revolving credit line, or a revolving line of credit.
How is a revolving credit facility different from a term loan?
A term loan is a fixed lump sum advanced upfront and repaid over a set term with interest on the full balance. A revolving credit facility lets you draw, repay and redraw funds up to a limit, with interest charged only on what you use. Term loans suit one-off purchases. Revolving credit facilities suit recurring or unpredictable cash flow needs.
How is a revolving credit facility different from a business overdraft?
Both let you draw funds up to a limit and pay interest only on what you use. The key differences are that a revolving credit facility is not tied to your bank account, the credit limit is agreed upfront, revolving credit facilities are generally more accessible than overdrafts since high-street banks have scaled back overdraft offerings, and revolving credit facilities are typically only available to limited companies.
How much does a revolving credit facility cost?
Three main charges typically apply. Interest is usually 7% to 25% per annum on the drawn balance. An arrangement fee of 1% to 5% of the limit is charged at setup. Some lenders also charge a non-utilisation fee of 0.5% to 1.5% per annum on the undrawn portion. Exact pricing depends on facility size, security available, and your business profile.
What credit limit can I get?
Facility limits typically range from £10,000 to £500,000 for SMEs, with larger limits available for established businesses or where security is provided. The lender will base the limit on your turnover, affordability and trading history.
How quickly can I set up a revolving credit facility?
Straightforward facilities can be set up within a few working days. More complex facilities, particularly those involving security or larger limits, can take longer due to underwriting and legal documentation. Once a facility is in place, drawdowns are usually available within 24 hours.
Will I need to provide a personal guarantee?
In most cases, yes. Lenders typically require a personal guarantee from one or more directors, particularly for unsecured facilities. This means you are personally liable for the debt if the business cannot repay it.
Do I need to secure the facility against assets?
Not always. Many revolving credit facilities are unsecured. Secured facilities may offer a higher limit or a lower interest rate, but they require an asset such as property or equipment as collateral.
What is a non-utilisation fee?
A non-utilisation fee is a charge applied to the undrawn portion of your facility limit. It is the lender's compensation for keeping funds available to you. Not all lenders charge it. Typical rates are 0.5% to 1.5% per annum on the undrawn balance.
Which businesses can FundingLinks arrange a revolving credit facility for?
FundingLinks arranges revolving credit facilities for UK limited companies, LLPs and PLCs. They are rarely available to sole traders, who usually use a business overdraft for similar flexibility.
Is a revolving credit facility regulated?
Most commercial revolving credit facilities provided to limited companies are unregulated. Facilities to sole traders or ordinary partnerships can fall under FCA consumer credit regulation, so FundingLinks works only with UK limited companies, LLPs and PLCs.
Can I have a revolving credit facility alongside other finance?
Yes. Many businesses use a revolving credit facility alongside a term loan, invoice finance or asset finance. Revolving credit is often used as a flexible top-up for short-term needs while longer-term funding supports growth or capital investment. Layering facilities requires careful structuring, which we can help you think through.
Related products
Other funding options that can work alongside, or instead of, a revolving credit facility.
Ready to set up a revolving credit facility?
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Written by
Sam Wells
Co-Founder, FundingLinks
Sam Wells co-founded FundingLinks alongside Chris Findlow, after more than 10 years in invoice finance and alternative lending, including senior broker and partnership roles at Kriya. He helps SMEs access competitive funding by matching them with the right lender, product and structure for their stage of growth.
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