Table of Contents
What is it?
A Revolving Credit Facility (RCF) is like a flexible overdraft for your business. You get a pre-approved pot of money you can dip into whenever you need, repay when you can, and draw from again — hence the “revolving” bit.
You only pay interest on what you actually use, not the full amount. It’s ideal for smoothing over short-term cash flow gaps or dealing with surprise expenses.
Think of it as your financial safety net – always there, but only costing you when you actually swing on it.
Pros and Cons
| Pros | Cons |
|---|---|
| ✅ Only pay interest on what you use | ⚠️ May have setup or facility fees even if unused |
| ✅ Super flexible – borrow, repay, borrow again | ⚠️ Usually lower limits than loans or asset finance |
| ✅ Helps smooth cash flow without long-term debt | ⚠️ Interest rates can be higher than standard loans |
| ✅ Often quicker and easier to set up than a loan | ⚠️ Some lenders require strong financials or security |
| ✅ Interest and fees are often tax-deductible | ⚠️ Can be tempting to rely on it too often – easy to overuse |
When is it a good fit?
An RCF might suit you if:
- You have seasonal cash flow ups and downs
- You want a safety net without taking out a full loan
- You need to cover short-term costs like stock, wages, or invoices
- You want flexibility – not fixed repayments
Extra tips and things to consider
- Unlike a term loan, there’s no set end date – you can keep the facility open as long as you’re within the terms.
- Works well alongside other finance – e.g. invoice finance or asset finance.
- Some lenders charge monthly or annual non-usage fees, so check the fine print.
- The interest and charges are usually deductible business expenses – again, check with your accountant.
Still unsure?
Want to know whether an RCF could work for your business – or whether something else would suit better?
Try our [Finance Finder Tool] or ping us a message – we’ll help you figure it out without the upsell.
