Revolving credit facility for working capital

How a revolving facility works

A revolving credit facility gives you an approved limit you can draw from whenever you need, repay when cash returns, and draw from again — over and over, like a credit card for the business. You pay interest only on what you have drawn, plus usually a small fee on the undrawn limit for keeping it available. It is designed for cash needs that come and go rather than a one-off lump sum.

How it differs from a term loan

A term loan gives you a fixed sum repaid on a fixed schedule — ideal for a defined cost like equipment. A revolving facility gives you flexible, reusable headroom — ideal for the fluctuating gap between outgoings and receipts. With a loan you borrow once; with a facility you borrow repeatedly within a ceiling. Match the tool to whether your need is a lump or a wobble.

How it differs from an overdraft

A revolving facility is close to an overdraft in spirit but usually larger, more formally structured, and more predictable in cost. Where an overdraft is a feature bolted to a bank account and repayable on demand, a committed revolving facility is a standalone agreement with clearer terms — often better suited to a business that needs reliable flexible funding rather than an occasional dip. See overdraft versus revolving credit.

When it fits your business

A revolving facility suits a business with a genuinely fluctuating cash need — seasonal swings, lumpy project cash flow, or a widening gap during growth — that wants headroom on standby without borrowing a fixed lump. Drawn and repaid with discipline, it is efficient; left permanently maxed out, it signals a deeper cash issue better solved another way.

Arranging one

The best time to arrange flexible headroom is before you need it, while the numbers look strong.

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