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Revolving Credit Facility

Looking for an on-demand credit loan whenever you want?

Get access to capital whenever your business needs it. Revolving Credit Facility is one of the alternative flexible finance options that allows for on-demand money withdrawal and convenient repayment as and when needed.

Table of Contents

What is a Revolving Credit Facility?

It is a rolling finance agreement that makes it possible for businesses to withdraw cash whenever required. Borrowers in this type of finance agreement engage in cyclic withdrawal and repayment of capital at agreed periods and interest rates with the lenders. RCF is more access-friendly than a similar financial option -overdraft facilities.

Revolving Credit Facility is more suited for the working class capital comprising the small and medium-sized businesses. SMEs can take advantage of RCF and use its funds to fulfill all sorts of legitimate business purposes -from payrolls to renovation/maintenance. Any cash needs of the business are well taken care of by availing of the Revolving Credit Facility.

A Revolving Credit Facility is a dynamic form of business loan. It is different from static business loans such as an overdraft or secured loans. The funding limit through RCF, repayment cycle terms and conditions are agreed upon between borrower and lender before undertaking Revolving Credit Facility.

One of the distinct features of RCF is its convenience of paying the interest on only the amount withdrawn from the total loan amount. The cycle is replenished and the withdrawal amount is set to default the agreed-upon loan amount once you make repayment on your corresponding withdrawals. Use Revolving Credit to pay back only on the amount of money used.

Salient features of Revolving Credit Facility

Here we enlist and discuss some striking features of the Revolving Credit facility which makes it one of the most popular alternative financing options among businesses.

Rolling Agreement

RCF does not require renewal or modifications in the agreement every time you withdraw, repay, and re-withdraw. It lays down the clear conditions on the onset of funding which is followed without needing to apply again for the same type of loan.

Same-day Withdrawals

In many cases, if you prove to be an ideal borrower, some lenders allow you to withdraw cash on the day of your application. RCF proves to be the faster finance instrument than most other finance options.

Better Cash Flow Management

By availing of RCF, businesses can improve their cash flow management and use the immediately available cash at hand for all business operations. The fact that you can access finance whenever you want keeps the stress of the non-availability of cash at bay.

Short-term Commitments

Unlike traditional forms of credit facilities, you do not require to be tied to an agreement for long durations with corresponding long interest repayment tenures. RCF is an on-demand facility, meaning that you may discontinue the finance cycle whenever you wish to do so.

Compounding Relationships

Lenders tend to increase the sanctioned amount and spending limit if the borrower promptly adheres to withdrawal and repayment conditions. This way trust is built with the lender which makes subsequent borrowing easier and faster.

Who can apply for a Revolving Credit Facility?

Small and large businesses in the United Kingdom can apply for and get loan incentives via RCF. However, one of the key RCF qualifying requirements is that the borrower must be a UK-based company with active business operations principally in the UK itself.

Make sure that relevant documentation such as management accounts, business plans, historical accounts, and asset records are up to date and ready for any audit. Financial institutions/lenders may require businesses to undergo numerous security checks for standard credit and fraud, anti-money laundering, and KYC to determine eligibility and payback guarantee for the corresponding loan period.

Frequently Asked Questions

Some lenders need you to furnish a personal guarantee if the applicant is seeking a loan amount under the RCF. If the borrower is unable to make repayments on specified periods, he/she shall be personally liable to repay the loan amount.

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  • Portfolio Finance
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Contact us to know more about each of them in detail.

The term typically is between 6 months and 2 years. If the borrower wants to renew the agreement, they shall be able to do so after 2 years at the direction of the lender.

Interest rates vary depending on the loan amount and various lenders. The interest rates under RCF are usually higher than other forms of traditional lending facilities.

Some lenders may allow you to do so but only with a personal guarantee agreement.

No, they do not. However, a personal guarantee is a must-requirement in case of defaulters failing to repay. A personal guarantee legally binds the borrower to pay off debt personally, if the business is unable to do so.

Check out some other finance options at Alpha Funding

For more information, click on any of the service links below:

  • Business Cash Advance
  • Property FInance
  • Unsecured Business Loan
  • Recovery Loan Scheme