Revolving Credit

A revolving credit (RCF) is a facility that gives you flexibility to manage your funding requirements

Similar to an overdraft, revolving credit allows you to draw-down and repay as often as you need within the agreed term and credit limit. It supports your business through the peaks and troughs that many businesses experience.

This is a facility for UK businesses that are established and have a trading history. They can be sole traders or limited companies. Revolving credit is separate to your agreed overdraft.

There are normally two costs associated with revolving credit, a setup fee and interest on the draw-down. The good news is that interest is only charged on the amount of the draw-down not the total facility. There are no long term contracts and provide complete flexibility for the borrower.

Interest is normally charged daily, and the capital can be repaid anytime during the agreed term. You can opt to pay the interest only if you wanted during the agreed facility period, rather than having to pay capital and interest. Having revolving credit can improve your business cash flow as and when it is needed.

Funds can be used for any legal business purpose, from recruitment to salaries, buying stock and more – this is truly a revolving facility. Funds can either be unsecured or secured depending on the amount requested. Once agreed funds can normally be in the bank very quickly.

The amount that a business can borrow will depend on the business, how strong are the accounts, trading history and depending on the amount required, may need security, PG and even a debenture.

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Why use Revolving Credit!

As with every business, there are periods when it can benefit the business to have a line of credit to call on if required. It fills the gaps of irregularity of sporadic revenue or seasonal trade, RCF can get you through these periods. It is great to know there is a back up plan you can call on when needed.
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