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Revolving credit facilities explained.
A revolving facility is a credit limit a company can draw on, repay, and draw on again — paying only for what is actually drawn. This guide explains how a facility such as Credicorp Flex works, how it differs from a fixed loan, and when the revolving shape is the right one.
What a revolving facility is
A limit, not a lump sum. You take part of it when you need it, repay, and the headroom comes back.
A revolving credit facility gives a company an approved credit limit it can use as needed. You do not receive the whole amount up front. Instead you draw part of the limit when you have a use for it, repay what you have drawn, and as you repay, the headroom is restored so you can redraw later. The limit revolves — hence the name. Interest is charged only on the balance you have actually drawn, not on the full limit sitting unused.
This is a different shape of borrowing from a business bridging loan, which hands you one lump sum for one purpose over a fixed term. A facility is built for needs that come and go. Because the borrower is the company rather than the director, a facility of this kind is body-corporate credit and sits outside the FCA consumer-credit regime — see lending and regulation.
Draw, repay, redraw
The cycle that defines a revolving facility, in three movements.
- Open the facility. A credit limit is set for the company. Opening the facility does not mean borrowing — nothing is owed until you draw.
- Draw what you need. Take part of the limit when a need arises. Interest starts on that drawn amount, and only that amount.
- Repay, and the headroom returns. As you repay the drawn balance, your available limit is restored. You can then draw again, without reapplying.
The practical effect is that you pay for use, not for access. A facility can sit at zero drawn for weeks, costing nothing in interest, and then carry a balance during a busy stretch. That is what makes it suited to uneven, recurring needs rather than a single visible gap.
Credicorp Flex, in figures
The operator's published terms for its revolving facility. Confirm the live figures before you open one — see credicorp.co.uk/business-credit-facility.
| Term | Value |
|---|---|
| Credit limit | £50 – £500 |
| Interest | 0.25% per day on drawn balance only |
| Establishment fee | £5.00, on first drawdown |
| Cost cap | 100% per drawing |
| Term | Ongoing while in good standing |
| Cycle | 14 days |
| Minimum per cycle | 10% of drawn balance, or £20, whichever is greater |
| Personal guarantee | None |
| Borrower | The company |
Note that the £5 establishment fee falls on the first drawdown, not on opening the facility, and that interest accrues on the drawn balance alone. The minimum-per-cycle figure is the floor on each repayment, not a cap on it — repaying more reduces the drawn balance, and therefore the interest, faster.
Revolving facility against a fixed loan
The two solve different problems. The table sets the shapes side by side; the test underneath is the quick way to choose.
| Revolving facility (Flex) | Fixed loan (Bridging Loan) | |
|---|---|---|
| Shape | A limit you draw on as needed | One lump sum, once |
| Best for | Uneven, recurring needs | A single, visible gap |
| Interest charged on | The drawn balance only | The outstanding principal |
| Reuse | Repay and redraw, no reapplication | Borrow again means a new application |
| Term | Ongoing while in good standing | 14 – 84 days, fixed |
| Cost when idle | None — nothing drawn, nothing charged | Interest runs for the whole term held |
A simple test: if you can name the amount and the date the gap closes, a fixed loan matches the need. If the need recurs and the amount varies, a revolving facility fits better. The operator sets the three products against each other at credicorp.co.uk/compare, and our working capital vs a term loan article goes deeper on matching the finance to the need.
A worked example
A made-up example, not a real customer, to show how charging on the drawn balance plays out.
Suppose a company opens a Flex facility with a £500 limit. In week one it draws £200 to cover a supplier while a customer invoice is outstanding. At 0.25% per day, that £200 costs £0.50 a day in interest; held for 20 days, the interest is £10.00, plus the one-time £5 establishment fee on that first drawdown — £15.00 in total. When the customer pays, the company repays the £200, and the full £500 headroom is restored. A fortnight later it draws £150 against a different gap. The point is that the £300 of unused limit cost nothing while it sat there, and the second drawdown carries no new establishment fee.
To explore the cost of a single drawing over a given number of days, the daily-interest maths is the same as a bridge, so the bridging loan cost calculator gives a useful feel for it.
When a facility fits — and when it does not
Fits well
- Cashflow that rises and falls week to week, where the amount needed varies.
- A buffer you want available on tap without reapplying each time.
- Short, repeated gaps between paying out and getting paid.
Fits poorly
- A one-off, known shortfall — a fixed bridge is tidier.
- A single supplier invoice you want to spread — Credicorp Slice is built for that.
- A long-lived asset purchase — match that to asset finance instead.