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What is a revolving credit facility?
A revolving credit facility is a pre-agreed borrowing limit that you can draw from, repay, and draw from again — repeatedly, without having to reapply each time. Think of it as a financial reservoir: the lender agrees a maximum amount you can access, and as long as you stay within that limit and meet repayment obligations, the facility remains available to you on an ongoing basis.
Unlike a standard business loan — where you receive a fixed lump sum and repay it over a fixed term — a revolving facility is flexible by design. You use what you need, when you need it, and the capacity is restored as you repay. This makes it a fundamentally different tool, suited to a different type of borrowing need.
How it works in practice
The mechanics are straightforward. Your lender sets a credit limit — say, £500. You can draw down any amount up to that limit at any point the facility is active. Interest accrues only on the outstanding balance you have drawn, not on the full limit. When you repay — whether in full or in part — that portion of the limit becomes available to draw again.
For example: you draw £300 to cover a supplier invoice. After 30 days you repay £300. Your full £500 limit is restored. A fortnight later a gap opens up and you draw £200. You pay interest only during the periods the balance is outstanding, and only on the amount actually drawn.
Once a facility is in place, subsequent draws can happen quickly — often on the same day — because the credit assessment and agreement are already done. That speed is one of the key operational advantages over starting a new loan application every time a gap appears.
Revolving credit vs term loans
A term loan delivers a fixed amount, repaid over a defined schedule with interest on the full balance throughout. It is the right tool when you need a specific, known amount for a specific purpose — purchasing equipment, funding a fit-out, or financing a one-off project.
A revolving facility is the right tool when your cash-flow need is recurring rather than one-off, when the exact amount and timing of gaps is hard to predict in advance, or when you want to avoid the cost and admin of multiple separate loan applications throughout the year. Businesses that carry seasonal stock, operate on invoice cycles, or bridge gaps between delivery and payment are natural candidates.
Paying interest only on what you have drawn — rather than on a fixed loan balance throughout — can also reduce the total cost of short-term finance if you repay promptly and reuse the facility several times over the year.
Credicorp Flex: a revolving facility built for UK businesses
Credicorp's own revolving product, Credicorp Flex, is designed specifically for UK businesses with short-term, recurring borrowing needs. The facility provides access to up to £500, with repeat draws available once the account is set up — no fresh application required each time you need to draw.
Interest applies only to the outstanding balance, not the full limit, so you control what the facility costs by controlling how much you draw and how promptly you repay. Once the facility is established, transfers are processed same-day, which matters when you are bridging a gap that has appeared at short notice.
Find out more about Credicorp Flex and check eligibility — the process is straightforward and designed for businesses that need speed without sacrifice on terms.
What it costs
Cost depends on how you use the facility. Because interest accrues only on drawn balances, a business that draws £200 for three weeks pays significantly less than one that draws the full limit for three months. This structure rewards disciplined use.
Full pricing details — including the daily rate and any applicable fees — are set out on the Credicorp Flex product page. There are no arrangement fees charged each time you draw, which is part of what makes a revolving facility more efficient than a series of discrete short-term loans for recurring needs.
Who a revolving facility suits best
A revolving credit facility is most valuable for businesses that:
- Experience recurring short-term cash-flow gaps — monthly, seasonal, or tied to payment cycles
- Can predict that they will repay within weeks rather than months
- Want to avoid the admin burden and cost of applying for finance repeatedly throughout the year
- Need same-day access to funds when a gap opens at short notice
- Prefer to pay only for what they use rather than carrying a fixed loan balance
It is less suited to businesses funding a single large capital purchase, or those whose repayment horizon is 12 months or more — for those purposes a term loan or asset-finance arrangement will usually be more cost-effective.
Frequently asked questions
- Can I draw from the facility more than once a month?
- Yes. Once Credicorp Flex is in place you can draw as often as you need to, provided you remain within your approved limit. There is no restriction on draw frequency.
- Do I pay interest when I am not using the facility?
- No. Interest accrues only on your outstanding balance. If you have repaid in full and the facility is sitting at zero, you are not paying anything during that period. Cost is directly tied to usage.
- How quickly can I access funds once the facility is set up?
- For established Credicorp Flex accounts, transfers are processed same-day. The initial application and setup takes longer — that is the point at which identity, eligibility and credit checks are carried out — but once the facility is active, subsequent draws move quickly.