Revolving Credit Facilities

Business Funding Process

What Is a Revolving Credit Facility?

RCFs are similar to traditional business loans; however, the borrower has more flexibility in repayment. Typically, they are not secured against personal or business assets. Revolving Credit Facilities are very similar to business loans; however, they give the borrower the flexibility to draw down, repay and redraw loans advanced to it. The balance of the facility will oscillate between zero and the maximum approved value – borrowers may be able to increase the maximum limit during the term.
Business Funding Process

Benefits Of Revolving Credit Facilities

Repayment Flexibility

The borrower has the flexibility to repay capital when it suits them. They also have the opportunity to increase their limit if the lender sees fit.

Drawdown Flexibility

Borrowers can drawdown when they need the funds. This flexibility leads to a lower cost of finance.

Working Capital Smoothing

RCFs are used as a great way of smoothing cyclical peaks and troughs in the borrower’s working capital cycle.

Lower cost of finance

Interest is charged on the amount withdrawn rather than the maximum, lowering the cost of capital for the borrower.

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