Revolving credit facility: meaning, comparison, and use cases

At Christie Finance, we help UK businesses access tailored revolving credit facilities that provide ongoing access to finance without the need to reapply each time.

What is a revolving credit facility?

A revolving credit facility is a type of business finance that gives you access to a pre-approved credit limit that can be used, repaid, and reused over time.

It’s a flexible alternative to traditional term loans, designed to help businesses manage working capital, smooth cash flow, or respond quickly to unexpected expenses.

In simple terms:

Think of it like a business overdraft — but often with higher limits, more flexible terms, and lower costs when used efficiently.

How a revolving credit facility works

Once approved, a lender sets a maximum borrowing limit (for example, £100,000). You can draw funds up to that limit at any time and only pay interest on the amount you’ve used — not the full limit.

As you repay the borrowed amount, your available balance is restored, allowing you to draw again when needed. This “revolving” access to credit makes it ideal for businesses with fluctuating cash flow.

Discover how merchant cash advances stack up against revolving credit for flexible working capital in our merchant cash advance guide.

Key features include:

• Pre-approved credit limit: Borrow up to an agreed amount without reapplying.
• Interest on what you use: You only pay for the funds you draw.
• Ongoing access: Reuse the facility as your balance is repaid.
• Flexible repayments: Choose when to borrow and repay within the facility period.

Revolving credit facility vs term loan

Understanding the difference between a revolving credit facility and a term loan helps you decide which option best suits your needs.

Feature	Revolving Credit Facility	Term Loan
Access	Funds can be drawn, repaid, and redrawn as needed	One lump sum received upfront
Interest	Charged only on the amount used	Charged on the full loan amount
Repayments	Flexible	Fixed monthly repayments
Purpose	Short-term cash flow management	Long-term investment or asset purchase
Renewal	Ongoing (subject to review)	Ends once repaid

If your business needs recurring access to working capital, a revolving facility offers greater flexibility. For one-off purchases or long-term investments, a business asset finance or term loan may be more suitable.

Compare revolving credit facilities with standard business loans by exploring how typical business loan rates work in our rates guide.

Benefits of a revolving credit facility

A revolving credit facility can provide a valuable financial safety net for many UK businesses. Some of the key advantages include:

1. Improved Cash Flow Control

Access funds whenever your business needs them — perfect for bridging gaps between supplier payments and customer invoices.

2. Only Pay for What You Use

Unlike a standard loan, you only pay interest on the amount you draw, helping reduce unnecessary costs.

3. No Need for Repeated Applications

Once the facility is in place, you can borrow and repay multiple times without new paperwork or re-approval processes.

4. Fast Access to Funding

Funds are typically available immediately after approval, providing a quick solution for short-term finance needs.

5. Flexible Repayment Terms

You decide how much to repay and when (within agreed limits), making it easier to manage cash flow fluctuations.

Typical use cases for a revolving credit facility

Many small and medium-sized businesses use revolving credit to manage day-to-day operations or fund short-term opportunities. Here are some common scenarios:

• Seasonal businesses: Cover operating costs during quieter months and repay when revenue increases.
• Stock and inventory purchases: Buy materials or stock quickly when demand rises.
• Unexpected expenses: Handle urgent costs such as equipment repairs or supplier payments.
• Contract-based work: Manage working capital between project start and client payment.
• Expansion opportunities: Seize growth opportunities without waiting for existing loans to clear.

This flexibility makes it a useful tool across industries like hospitality, healthcare, retail, and property services — all of which Christie Finance supports.

How revolving credit differs from other finance options

While similar to an overdraft or credit card, a revolving credit facility usually offers larger borrowing limits and more competitive rates.

It also differs from products like unsecured business loans and merchant cash advances, which are typically repaid in fixed instalments or linked directly to sales volume.

Businesses looking for short-term liquidity without long-term commitments often find revolving credit to be the ideal middle ground.

Is a revolving credit facility right for you?

A revolving credit facility is best suited for businesses that:

• Have regular cash flow fluctuations
• Need access to working capital for short periods
• Want flexibility without committing to a fixed-term loan
• Have a good trading history and credit profile

If your business needs funding for a one-time purchase — such as property or equipment — a commercial bridging loan or development finance may be a better fit.

Why work with Christie Finance?

At Christie Finance, we understand that no two businesses are alike. With over 45 years of experience helping UK businesses secure finance, our advisers take the time to understand your goals and match you with a facility that fits your operations.

We work with a wide panel of lenders to negotiate competitive rates and flexible terms — helping you maintain control of your cash flow without the stress of rigid repayment structures.

Ready to explore revolving credit options?

If you’d like to learn more about revolving credit facilities for businesses or want to discuss your funding needs, we’re here to help.

Get in touch with the Christie Finance team today for tailored advice and access to flexible finance solutions that keep your business moving.