Revolving Credit Facility
A revolving credit facility is a pre-agreed limit a business can draw down, repay and redraw for the life of the facility, with interest charged only on the balance outstanding. It behaves like an overdraft that is not tied to your bank, typically runs for 12 to 36 months, and is priced with an arrangement fee, a margin on drawn funds and often a non-utilisation fee of around 0.5% to 1.5% on the undrawn portion. It suits businesses with lumpy cash flow - seasonal stock, payroll ahead of receipts, project mobilisation costs - and it is the wrong product for funding a fixed asset that should be on a term loan.
Criteria and pricing
What lenders on our panel will typically do on this product today.
- Facility size
- £25,000 to £5m+
- Term
- 12-36 months, usually renewable annually
- Interest
- Charged on drawn balance only; typically 8-18% pa depending on covenant
- Non-utilisation fee
- ≈ 0.5-1.5% on the undrawn limit
- Arrangement fee
- 1-3% of the limit
- Security
- Debenture usual; personal guarantees common for SMEs
- Trading history
- Usually 12-24 months of filed or management accounts
- Speed
- 5-15 working days from full information
Worked example - £250,000 facility, seasonal wholesaler
- Facility limit
- £250,000
- Arrangement fee at 2%
- £5,000
- Average drawn balance over the year
- £120,000
- Margin at 11% on drawn funds
- £13,200
- Non-utilisation fee at 1% on £130,000 undrawn
- £1,300
- Total annual cost
- ≈ £19,500
- Effective cost on funds used
- ≈ 16.3%
Figures are typical UK market ranges as at 2026 and are indicative only - your terms depend on the asset, the income, the exit and the lender we place the case with.
Who this works for — and who it does not
You are likely to qualify if
- UK limited company or LLP, usually trading 12 months or more
- Filed accounts plus recent management figures and bank statements
- Demonstrable serviceability from trading cash flow, not from the facility itself
- Willingness to grant a debenture and, for most SMEs, personal guarantees
This is the wrong product if
- Buying plant, vehicles or property - use asset finance or a term loan and keep the revolver for working capital
- Businesses already at the limit of an overdraft with no headroom in cash flow
- Loss-making companies with no route back to profit within the facility term
- Pre-revenue start-ups, which are better served by grants, equity or invoice finance against strong debtors
What actually happens, and when
- Day 1-2
Affordability sizing
We review accounts, bank data and the cash-flow cycle to size a limit a lender will actually agree.
- Day 2-5
Lender selection and terms
Offers compared on margin, non-utilisation fee, covenants and security, not just the headline rate.
- Day 5-10
Credit and security
Credit committee approval, debenture and guarantee documentation.
- Day 10-15
Facility live
Limit available to draw; most clients then run it as a buffer rather than keeping it fully drawn.