A revolving credit facility works like a business overdraft that sits ready for when you need it: draw down what you need, repay it, and the limit becomes available again. We help incorporated UK businesses compare options through Funding Options by Tide’s panel of partner lenders.
The short answer
A revolving credit facility is an agreed credit limit that a business can draw from, repay and draw from again as often as needed, up to the limit. You usually only pay interest on the amount you have drawn rather than the whole facility, which makes it a flexible way to manage short-term and fluctuating cash-flow needs.
It suits businesses with uneven cash flow that want a standing safety net for gaps, opportunities and one-off costs, rather than a single lump sum they must draw all at once.
Once the facility is approved, you have a credit limit you can dip into whenever you need to. As you repay what you have drawn, that headroom is restored and available to use again, which is where the “revolving” name comes from.
Interest is generally charged only on the balance you have drawn and for the time you hold it, though facility or non-utilisation fees may also apply. All rates and fees are indicative and set by the lender following their own checks.
A term loan gives you a single lump sum repaid over a fixed schedule, which suits a known, one-off cost. A revolving credit facility is better matched to recurring or unpredictable needs, because you can draw and repay flexibly without reapplying each time.
Which is more cost-effective depends on how you use it. Any indicative figures should be compared against the total cost of alternatives, and finance is subject to status, lender checks and formal approval.
All figures shown are indicative only, not a formal offer, and are subject to status, lender checks and formal approval. Actual rates, amounts and terms are set by the lender.
Representative example: for a business loan of £25,000 over 36 months at 8.9% APR (fixed), you would repay 36 monthly instalments of £794. Total amount repayable £28,584. An arrangement fee of £750 is payable and is reflected in the APR. Representative 8.9% APR.
Questions
A business term loan is a single lump sum repaid on a fixed schedule, while a revolving credit facility lets you draw, repay and redraw up to a limit as needed. The revolving option suits recurring or unpredictable cash-flow needs.
Interest is generally charged only on the amount you have drawn and for the time you hold it, though facility or non-utilisation fees may apply. All figures are indicative until confirmed by the lender.
Yes. As you repay what you have drawn, the limit is restored and can be used again, up to your approved limit and for the term of the facility.
The facility is provided by a lender following their own assessment and formal approval. Funding Options by Tide is a credit broker who can compare options from their panel of partner lenders and, if suitable, introduce you to one; it is not a lender.
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