Business credit facility explained

What a credit facility is

A business credit facility is a pre-agreed amount of funding your company can dip into when it needs to, rather than receiving in one go. You draw what you need up to the credit limit, repay as money comes in, and the headroom returns for next time. It is a revolving arrangement, which is what sets it apart from a one-off loan.

Facility versus term loan

A term loan hands you a fixed sum on day one and you repay it over a set period — ideal for a known, one-off cost. A facility is reusable and open-ended while it stays in place, which suits recurring or unpredictable needs. The practical test: if you know exactly how much you need and what for, a loan is often simpler; if the requirement comes and goes, a facility usually fits better. The two are compared head to head in how to compare finance options.

What it costs

Because a facility is reusable, the charge applies to the balance you have actually drawn, not the full limit. Leave it untouched and the running cost is low; draw heavily and you pay for that use. That makes the headline limit less important than how you use it. To compare the real cost of drawing against an alternative, run the figures through the true cost of borrowing calculator.

When a facility suits a company

Facilities earn their keep where cash flow is uneven: covering payroll before a big invoice lands, buying stock ahead of a busy season, or smoothing the gap between paying suppliers and being paid. Seasonal trades and stock-heavy businesses are natural fits — see the sector view for retail or hospitality. Credicorp lends to the company, not to you personally, and takes no personal guarantee.

Using it well

A facility is a tool for timing, not a substitute for profit. Used well, it is drawn for a clear reason and repaid as the cash it bridged arrives. Used poorly, it becomes a permanent overdraft that never clears — a sign the underlying issue is margin, not timing. Keep an eye on how much of the limit sits drawn month to month; persistently maxed-out is the warning light. Product detail and indicative terms are on the Credicorp Flex page, and you can apply online.