Revolving Credit Facility
A revolving credit facility is a short-term financial solution that allows business to access credit to support working capital.
Key Takeaways
- A revolving credit facility gives a business a credit limit it can draw from, repay and draw from again during the agreement. Agreements usually last up to 12 months, and interest is typically charged only on the amount drawn, not on the full limit.
- It is mainly used for short-term needs such as cash flow, unexpected or emergency costs, tax bills, stock purchases and staffing costs. Once the facility is in place, funds can typically be drawn without making a new application each time.
- Businesses generally need at least six months' trading history to apply. Lenders set the limit based on turnover, cash flow, existing debt and credit history, and may ask for a personal guarantee or security depending on the size of the facility. Renewal at the end of the term is not automatic.
Last updated: 07/10/2026
What is a revolving credit facility?
A revolving credit facility gives businesses a line of credit that allows them to withdraw an amount to be repaid over a period of time. After the funds have been settled, the business can then repeat the process and withdraw further funds.
With a revolving credit facility, the interest rate is fixed, determined by the lender, and the interest paid is usually only for the amount borrowed, not the credit limit set.
This method of finance is typically shorter-term, with the agreement usually lasts up to 12 months, with the funds used for business cash flow, unexpected or emergency costs, or general business activity. An extension of the credit facility may be available depending on the lender and subject to credit.
As there isn’t a payment schedule put in place, a revolving credit facility can be considered a flexible solution for businesses wanting finance quickly that can be repaid within a short space of time.
How does a revolving credit facility work?
When you contact us, we will request some information from you. Depending on your business and the intended use of the credit line. This may include recent financial statements, as well as bank statements and other supporting information.
Once the information has been checked over, our panel of lenders will be reviewed, and a lender will be selected based on your circumstances. Further checks will be carried out, including identity verification, as part of our Know Your Customer (KYC) requirements.
Following the approval, a credit limit is set by the lender, as well as the duration of the revolving credit facility. After you sign the agreement and final checks have been completed, you will have access to the credit facility.
Benefits of a revolving credit facility
- Flexible borrowing
- Access to funds on demand
- Interest is only paid on amount borrowed
- Easy access to funds
- Help manage cash flow
- Suitable for short-term finance
- Helps to build a positive credit record
- Can be unsecured subject to terms
What can I use a revolving credit facility for?
A revolving credit facility is a short-term financial option used to provides businesses with access to credit.
Other uses include:
- Cash flow or working capital
- One off purchases
- Purchasing assets
- Unexpected or emergency payments
- Tax bills
- Short-term working capital
- Funding new marketing campaigns or promotions
- Staffing costs
Is a revolving credit facility suitable for your business?
A revolving credit facility is ideal for businesses requiring a short-term financial solution for uses such as managing cash flow, paying for unexpected or emergency costs, or for purchasing new assets, stock or inventory.
With fixed interest rates only being paid on the credit borrowed, not on the maximum amount, as well as the quick turnaround to secure the facility, this method of finance is ideal for businesses wanting access to flexible short-term finance.
Things to consider with a revolving credit facility
What to consider when applying for revolving credit facility:
Length: Short-term finance, usually lasting up-to 12 months
Interest rate: Interest rate is fixed, and is only paid on amount borrowed, not the maximum credit
Purpose: Typically used for cash flow and unexpected costs
Extensions: Depending on the lender, you may be able to extend the agreement.
Speed: Revolving credit facilities usually have a quick turnaround to granting the funds
Eligibility: Businesses must have at least 6 months trading history to be able to apply for a revolving credit facility
Alternative solutions to a revolving credit facility
Working capital loan: A working capital loan is ideal for businesses looking to secure a short-term financing solution to help manage daily operations and provide sufficient cash flow for the business.
Unsecured business loan: This loan is based upon the borrower’s creditworthiness, with no need for collateral. If you are an asset-light business, or prefer not to use your assets as security, an unsecured loan can be an ideal option.
Invoice financing: Invoice financing provides early access to your customer invoices that are owed to your business, with invoice factoring and invoice discounting being the two main methods of invoice finance.
How to apply for a revolving credit facility
We work with a host of lenders and financial institutions to provide competitive financial solutions for you.
If you would like to learn more about our financial solutions or to get a quote, simply fill in the form and we will get back to you. If you would like to speak to us directly, you can call us on 0115 958 6872 and a member of our team will be happy to speak to you. Alternatively, you can email us at [email protected].
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Revolving Credit Facilities FAQs
How does a revolving credit facility differ from a business term loan?
A term loan provides a single lump sum, repaid in fixed instalments over an agreed period. Once repaid, the agreement ends. A revolving credit facility sets a maximum limit that a business can draw against, repay and draw against again throughout the agreement. For businesses whose funding needs change from month to month, this ongoing access can be more practical than taking out several separate loans.
Is a revolving credit facility the same as a business overdraft?
The two work in similar ways, but they are separate products. An overdraft is linked to a business current account and is usually provided by the business's own bank. A revolving credit facility is a standalone agreement, which means it can come from lenders outside a business's banking relationship. Because we work with a panel of lenders, this can widen the options available compared with approaching a single bank.
Will I need to provide security or a personal guarantee?
This depends on the lender, the size of the facility and the business's financial position. Some revolving credit facilities are available on an unsecured basis, although lenders often ask directors for a personal guarantee in these cases. Larger facilities may require business assets as security.
How is the credit limit decided?
Lenders usually set the limit by looking at turnover, profitability, cash flow patterns, existing debt and credit history. Recent bank statements and management accounts often carry significant weight, because they show how money moves through the business. In our experience, a business with steady, well-documented income is generally in a stronger position to secure a higher limit.
What happens when the facility term comes to an end?
At the end of the agreed term, any outstanding balance usually needs to be repaid, unless the lender agrees to renew or extend the facility. Renewal is not automatic. The lender may review the business's performance again and could adjust the limit or terms. Planning ahead of the end date can help avoid pressure on cash flow.
Can a business with a limited trading history or adverse credit apply?
Lenders generally expect a minimum trading history, and criteria differ across the market. Adverse credit does not necessarily rule out an application, but it may affect the limit available, the pricing, or whether security is required. Where a revolving facility is not suitable, alternatives such as invoice finance may be worth considering, as these rely more on the strength of the business's customer base.
How quickly can I draw funds once the facility is in place?
Once the agreement is signed and final checks are complete, businesses can typically draw funds within the agreed limit without submitting a new application each time. How long each drawdown takes depends on the lender's processes, but it is often much quicker than arranging new borrowing.
Why choose BTG?
As a leading nationwide finance broker, we have access to a full market of funders, banks and alternative funders. With dedicated teams of sector specialists and industry specialists in the construction, healthcare, agriculture, renewables and fleet management sectors we can help all businesses with their funding requirements.
Benefits of using a finance broker?
Whilst banks can offer different rates, they often reject certain types of purchase and have strict lending criteria. we can access to a panel of specialist lenders with a variety of options and rates that are not available to customers who go direct. We can also explore the whole lending market, saving you time and effort whilst giving you competitive rates and a greater chance of acceptance.
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