Revolving credit facility
Struggling with unpredictable cash flow? Need a flexible way to cover expenses as they arise? A revolving credit facility could give your business access to funds on demand - helping you pay suppliers, cover payroll, or invest in short-term growth.
Used by thousands of SMEs across the UK, revolving credit is a line of credit you can draw from, repay, and reuse - similar to a business credit card, but often with lower interest rates and higher limits.
Revolving credit facility: what it is and how it works
What is a revolving credit facility?
A revolving credit facility is a type of flexible finance that allows your business to borrow, repay, and borrow again - without reapplying each time. It’s designed to support short-term working capital needs and is typically used to manage cash flow gaps or cover unexpected costs.
This kind of facility is pre-approved up to a set limit. You only pay interest on what you use, and once repaid, the funds become available again.
Key features
Credit limit: pre-approved by the lender, based on business performance
Interest: charged only on funds drawn, not the full limit
Repayment: flexible—repay early or over time depending on terms
Access: typically available through an online portal or app
Reusability: re-borrow once funds are repaid
Example
Your business has a £50,000 revolving credit facility. You draw down £20,000 to cover inventory. You only pay interest on that £20,000. Once repaid, your full £50,000 limit becomes available again—without reapplying.
What can I use a revolving credit facility for?
Covering seasonal dips in revenue
Use credit to manage cash flow during quieter periods without cutting back on staff or marketing.
Bridging invoice gaps
Access funds while waiting on client payments to keep suppliers and operations running smoothly.
Paying unexpected tax bills
Spread the cost of surprise VAT or corporation tax bills without long-term borrowing.
Financing marketing campaigns
Fund growth initiatives like product launches or promotions without draining cash reserves.
Managing stock purchases or supply chain delays
Quickly access capital to buy stock or respond to supply chain disruptions.
Investing in equipment or technology upgrades
Finance new tools or systems to improve efficiency without committing to fixed-term loans
How does Funding Options work?
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Funding Options by Tide helps UK SMEs find fast, tailored business finance by connecting them with over 80 trusted lenders. Backed by Tide and FCA-regulated, the service is free and easy to use.
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Tips for managing your revolving credit facility
Credit score
Always make your repayments on time and in full to ensure your line of credit has a positive, rather than negative, impact on your credit score.
Careful borrowing
Only borrow what you can afford. Given the revolving nature of these finance options, you should be prepared to think strategically every time you dip into the funds.
Emergency fund
Keeping a company emergency fund will enable you to repay your loan with greater ease.
Budget
Great credit management starts with good preparation. Draw up a company budget, include what you expect to earn and plan to spend and see if there are any gaps you may need to fill. This will ensure you’re not surprised by any unexpected payments.
Estimate your costs today
If you're ready to take your business to the next level, use our business loans calculator to get an idea of what you can afford.
Want to understand the cost of your loan?
Use our business loan calculator below to find out how much you can borrow to take your business to the next level.
Calculations are indicative only and intended as a guide only. The figures calculated are not a statement of the actual repayments that will be charged on any actual loan and do not constitute a loan offer.
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Financial product information
Representative example*
• 7.63% APR Representative based on a loan of £50,000 repayable over 24 months.
• Monthly repayment of £2,252.94. The total amount payable is £54,070.56
*Some lenders may apply fees during the application process, please note that these are set and provided by these entities.
Annual Percentage Rates
Rates from 2.75% APR
Repayment period
1 month to 30 years terms
Is it right for your business?
Revolving credit facilities are typically best for:
UK-registered businesses trading for 12+ months
companies with fluctuating working capital needs
businesses with a reliable track record and turnover
SMEs needing access to funds without committing to a long-term loan
It may not be suitable for startups or businesses with limited trading history.
Revolving credit vs business loan
Feature | Revolving credit facility | Business loan |
Flexibility | High | Fixed |
Interest | Only on what you use | On total borrowed amount |
Reusability | Yes | No |
Term | Ongoing | Fixed duration |
Suitable for | Ongoing cash needs | One-off investments |
What impacts eligibility?
Eligibility criteria
Lenders look at a few key factors when assessing applications:
Trading history – typically 12+ months of accounts
Turnover and profitability – to check affordability
Credit score – a good credit record improves access and rates (see business loans for bad credit)
Purpose of funds – working capital, not speculative use
Security – some lenders may require a personal guarantee or business asset as collateral
Revolving credit vs other finance options
Business loans
Business loans are best for one-off investments with fixed repayments. You borrow a lump sum and repay over months or years.
Invoice finance
Invoice finance releases money tied up in unpaid invoices.
Asset finance
Asset finance is used to fund vehicles, machinery and equipment.
Merchant cash advance
Merchant cash advance borrows against future card sales
Business overdraft
Business overdraft is linked to your account, but often lower limits and higher rates.
Business credit card
Business credit card is useful for small purchases and employee spending
How to apply for a revolving credit facility
2. Check eligibility
Look at turnover, trading history, and credit profile.
Compare 80+ lenders
Access a wide range of trusted lenders: from high street banks to alternative finance providers.
Submit documents
Bank statements, proof of ID, turnover figures
Get approval
Some decisions are made within 24 hours
Draw funds
Access via an online platform and start using it
Want to learn more about revolving credit facilities?
What makes a revolving credit facility different from an overdraft?
An RCF is not tied to your business current account and usually provides a higher limit and greater flexibility than an overdraft.
How quickly can I access funds?
Once approved, you can usually draw funds within 24 to 48 hours.
Do I pay interest on the full limit?
No. You only pay interest on the amount you actually use.
Is it secured or unsecured?
It can be either. Secured facilities offer lower rates but may require collateral. Unsecured facilities depend on your credit profile and may need a personal guarantee.
Can startups get a revolving credit facility?
It’s harder for startups without trading history, but some lenders may consider them. Other options like business loans for new businesses may be more suitable.
Please note that the information above is not intended to be financial advice. You should seek independent financial advice before making any decisions about your financial future.
It’s important to remember that all loans and credit agreements come with risks. These risks include non-payment and late-payment of the agreed repayment plan, which could affect your business credit score and impact your ability to find future funding. Always read the terms and conditions of every loan or credit agreement before you proceed. Contact us for support if you ever face difficulties making your repayments.
Funding Options, now part of Tide, helps UK firms access business finance, working directly with businesses and their trusted advisors. Funding Options are a credit broker and do not provide loans directly. All finance and quotes are subject to status and income. Applicants must be aged 18 and over and terms and conditions apply. Guarantees and Indemnities may be required. Funding Options can introduce applicants to a number of providers based on the applicants' circumstances and creditworthiness. Funding Options will receive a commission or finder’s fee for effecting such finance introductions.
Benefits of revolving credit facilities
Pros | Things to consider |
Only pay interest on what you use | Over-borrowing can become costly if not managed well |
Funds can be reused without reapplying | Variable interest rates may apply |
Greater flexibility than overdrafts | Some lenders require collateral or guarantees |
Higher limits than business credit cards | Fees may apply for setup or renewal |
Fast access - sometimes within 24 hours | Requires discipline and cash flow planning |
Joe Morley
Business Finance Lead
Joe has been helping UK businesses secure the funding they need since 2015. Over the years, he’s supported hundreds of SMEs in accessing millions of pounds for everything from purchasing essential assets to unlocking working capital for day-to-day operations. As Head of Sales at Funding Options, Joe leads a large team of expert Business Finance Specialists dedicated to finding the right solution for every customer. His goal is simple - to make securing finance straightforward, stress free, and tailored to each business’s needs.