Revolving Credit Facility for Business

A revolving credit facility gives your business flexible access to funds you can draw and repay as needed, much like an overdraft but arranged independently of your bank. You only pay interest on what you actually use, which makes it a sensible way to manage cash flow, seasonal peaks and unexpected costs without carrying the cost of a loan you have not spent. Sadi's Commercial Finance is an NACFB and FIBA registered commercial finance brokerage and arranges revolving facilities suited to how your business trades.

Who it is for: businesses with fluctuating or seasonal cash flow that want a flexible safety net rather than a fixed lump sum loan, and businesses whose bank has reduced or withdrawn an overdraft.

How a revolving credit facility works

A credit limit is agreed and sits ready. You draw what you need, when you need it, usually online and often same day. Interest accrues only on the drawn balance, for the days it is drawn. When you repay, that headroom becomes available again, which is what makes it revolving rather than a one off loan.

Most facilities are agreed for a period of twelve months and then reviewed, and many have no fixed repayment schedule as long as you stay within the limit and keep the account in order. Some carry a small non utilisation fee on the undrawn portion, which is the main thing to check when comparing offers.

Key features

Interest charged only on drawn funds, for the days they are drawn
Renewable facility, typically reviewed annually
Draw and repay as often as you like within the limit
Usually unsecured, though a personal guarantee is common
Funds normally available same day once the facility is live
Well suited to seasonal cash flow and unpredictable costs

Common uses

Covering a payroll or VAT bill that lands before a large customer payment
Buying stock ahead of a peak season
Bridging the gap while an invoice or a grant is settled
Replacing an overdraft the bank has cut or withdrawn
Taking on a bigger contract without stretching working capital
Holding a standby buffer for the unexpected, at little cost while unused

How to get a revolving credit facility with Sadi's Commercial Finance

Speak to a specialist. Tell us about your cash flow pattern and the limit you have in mind. We respond the same working day.
Share your trading history. Turnover, recent bank statements and management figures so we can assess a realistic limit.
Get matched with a provider. We compare providers on limits, interest rates, fees and how flexible the drawdown terms really are.
Facility agreed. A credit limit is set up and ready to draw against, usually within one to two weeks.
Draw and repay as needed. Access funds when you need them and repay when you can, paying interest only on the drawn balance.
Annual review. The facility is reviewed and, where trading supports it, the limit can be increased.

What lenders assess

Providers look at turnover and how consistent it is, the pattern of your bank account including how often it goes overdrawn, filed accounts and current management figures, existing debt and any other facilities, the directors' credit position, and any HMRC arrears. Because most revolving facilities are unsecured, the business's trading strength carries more weight than it would on a secured product.

Limits are usually set as a proportion of monthly turnover. A clean bank account with a clear seasonal pattern reads well. Frequent returned direct debits or an account that lives permanently at its overdraft limit is what causes an application to be declined or the limit to be set lower than you hoped.

What it costs

Interest is charged on the drawn balance only, usually as a monthly rate or a margin over base rate. On top of that there may be an arrangement fee when the facility is set up, a small non utilisation fee on the undrawn portion, and sometimes a renewal fee at each annual review.

A revolving facility is generally more expensive per pound drawn than a secured term loan, and cheaper than a merchant cash advance. Its real value is that an idle facility costs very little, so the sensible comparison is the annual cost of having the line available against the cost of borrowing a lump sum you may not need. Our broker fee is disclosed in writing before you commit.

How long it takes

Most facilities are agreed within a few working days and live within one to two weeks, since there is usually no security to take and no valuation. Once the facility exists, individual drawdowns are typically same day. It is worth putting a facility in place before you need it, because applying in the middle of a cash squeeze is when limits come back smallest.

Case study

An e-commerce brand used a £50k revolving facility to manage inventory cycles. They drew funds monthly and repaid after each sales peak.

Revolving facility compared with the alternatives

A term loan is cheaper per pound but you pay for the whole amount from day one whether or not you use it, so it suits a known, one off cost. An overdraft behaves similarly to a revolving facility but is tied to your bank and can be reduced or withdrawn at short notice. Invoice finance is usually cheaper again but only works if you invoice other businesses on credit terms.

The simple rule: if you know exactly what you need and when, take a loan. If the need is unpredictable, seasonal or short lived, a revolving facility usually costs less overall.

Why use a broker

Facilities that look similar on the headline rate differ sharply in the detail, particularly on non utilisation fees, minimum drawdown periods, renewal charges and how quickly funds actually arrive. We compare providers on limits, fees and flexibility, and help you set a facility that matches your trading pattern, so you have working capital on tap without paying for money you are not using.

We are registered with the NACFB and FIBA, and we are paid to find the right facility rather than to place a particular provider.

Frequently asked questions

How is a revolving credit facility different from a business loan?

A loan is a fixed lump sum repaid over a set term. A revolving facility lets you draw and repay repeatedly within an agreed limit, paying interest only on what you use.

Do I pay interest on the whole credit limit?

No, only on the funds you have actually drawn, which keeps costs down when the facility is idle. Some providers charge a small fee on the undrawn portion, so check that when comparing.

Is a revolving credit facility suitable for seasonal businesses?

Yes, it is one of the best fits. You draw ahead of a peak and repay out of the takings afterwards, so the cost tracks the trading cycle instead of running all year.

How is it different from a bank overdraft?

The mechanics are similar. The practical difference is that a revolving facility is arranged independently of your bank account, so it does not disappear if your bank reviews its overdraft book, and limits are often higher.

Do I need to give security?

Most facilities are unsecured, though a personal guarantee from the directors is common. Larger limits may require a debenture over the company. We will tell you what any provider is asking for before you sign.

What limit could my business get?

Limits are usually set as a proportion of monthly turnover, so the figure scales with the size of the business. Send us your turnover and recent bank statements and we will give you a realistic range rather than a guess.

Can I repay early without a penalty?

Generally yes, and that is the point of the product. Interest stops accruing on the amount you repay. Check whether the provider applies a minimum drawdown period, as a few do.

What happens at the end of the twelve months?

The facility is reviewed and, where trading supports it, renewed and sometimes increased. It is not usually a hard repayment date, but you should not assume automatic renewal either.

Related guides

Speak to us about a revolving facility

Tell us your turnover and the limit you have in mind and we will tell you what is achievable and what it will cost. We respond the same working day. Contact Sadi's Commercial Finance.