What Is A Revolving Credit Facility? (RCF)

What Is A Revolving Credit Facility? (RCF)

A Revolving Credit Facility is a pre-approved type of credit, funded by banks or lenders to support businesses. Although RCF has been available for some time, it’s only recently started to become a popular choice for many companies. But why?

Essentially, an RCF allows borrowers to draw down funds, make repayments and draw down again at another time if needed, providing the name ‘revolving’. Draw downs can be accessed quite quickly, without having to go through the lengthy procedure of reapplying every time. Meaning it’s a practical solution for many companies.

In this blog, we provide a bit more information about what an RCF is, how it compares to a fixed-term loan and the benefits of choosing an RCF.


RCF Vs Fixed-term Loans

Both financial options allow businesses to access funds, but with some key differences:

Fixed-term Loans – these are based on an agreed repayment schedule and time frame set by the bank or lender. The borrower will receive the full loan upfront and begin their regular repayments.

Revolving Credit Facility – this allows borrowers to draw down from the loan several times. Meaning you can borrow and repay again and again. There’ll be a total amount that can be spent over a period of time, which again, the lender or bank will set.


How Will A Revolving Credit Facility Help My Business?

With so many factors impacting businesses month on month, it’s hard to forecast for the future. Although a Business Contingency Plan can help prepare for some of these instances, there are times when immediate access to cash is essential, and that’s where an RCF can really come into its own. A Revolving Credit Facility’s flexibility in attaining funds is appealing to many businesses as well as several other benefits such as:

  • Flexible management over access to funds
  • Ability to draw down and repay, multiple times
  • Helps to resolve unexpected cashflow problems
  • Saves time by not having to reapply for loans
  • Easily access funds as and when you need them
  • Provides peace of mind


Things To Consider About An RCF

Although there are some great benefits to a Revolving Credit Facility, you must consider whether this form of funding works for your business. There are several conditions which come with an RCF including:

  • Its own terms and conditions
  • Its own fees (draw down fee/arrangement fee/non-utilisation fee etc.)
  • You’ll need to provide a personal guarantee, potentially making you liable
  • They can have higher interest rates


Speak To The Experts

If you’re interested in learning more about a Revolving Credit Facility or feel it could be the best solution to support your business growth, then get in touch with Busby Finance today. We’ll arrange a consultation to discuss the most suitable financial solution for you.