Revolving credit facility: why the headline rate tells you almost nothing
By the CapExpand team
Reviewed by Alex Beardsley, Founder · UK commercial finance broker
The short version
- Interest runs on the drawn balance, not the limit, so the cost of a facility is a function of how long the money is out rather than of the headline rate.
- On the illustrative arithmetic below, the same 1.5% per 30 days produces £9,000 of cost in one year and £1,125 in another.
- Arrangement and non-utilisation fees are where an undrawn facility stops being free. Both sit in the agreement rather than in the advertised rate.
A revolving facility is the product most often quoted at businesses and least often compared properly, because a rate per 30 days and an APR look like the same kind of number and are not. This page works the arithmetic rather than describing it. CapExpand is a broker working across 200+ UK lenders; the lender makes every credit decision, and nothing here is a quote.
What it is
A limit agreed once, drawn against when the business needs it, repaid, and drawn again inside the term. Interest accrues on what is outstanding. The bank version of this is an overdraft, tied to the current account; the standalone version is a revolving credit facility, and because it is not attached to an account a business can hold one with a lender it does not bank with.
Lenders market them under several names. A credit line, a flexi-loan and a revolving loan are the same shape of product with different labels on the front. What separates them in practice is the fee structure rather than the mechanic.
The utilisation arithmetic
Take a £50,000 facility at an illustrative 1.5% per 30 days. That rate is not a lender's: it is a round number chosen to make the point legible. The cost over a year depends on two things the rate does not tell you, which are how much is drawn and for how long.
| How the facility is used | Balance drawn | Interest over the year |
|---|---|---|
| Drawn in full, all year | £50,000 | £9,000 |
| Drawn in full, six months | £50,000 | £4,500 |
| Half drawn, all year | £25,000 | £4,500 |
| Half drawn, three months | £25,000 | £1,125 |
| Approved, never drawn | £0 | £0 |
The bottom row is the one worth sitting with. An approved facility that is never drawn carries no interest at all, which is why a business with lumpy cash flow will often hold one it rarely uses. It is also why the fee lines matter more here than on a term loan: they are the only cost an unused facility can generate.
Against a term loan
A term loan pays out once and charges from day one on the whole amount. If the money is for a machine you will own for five years, that is the right shape and a facility is the wrong one. If the money is for a gap between paying suppliers in March and being paid by customers in May, a term loan charges you for nine months you did not need.
The comparison that misleads is rate against rate. A facility quoted per 30 days and a loan quoted as an APR only become comparable once you fix an assumption about how long the facility balance is outstanding, and the honest version of that assumption is usually your own last twelve months of bank statements rather than a best case. For scale, across the 47 panel lenders with an unsecured product covering £50,000, published annual rates span 4.1% to 70.8% with a median floor of 17% across 109 products, checked September 2026. That is a span across panel products on a date, not a quote. Our note on converting between rate formats covers the same trap on merchant cash advances.
Against an overdraft
Mechanically they are close cousins. The differences that matter are who controls the limit and how quickly it can be withdrawn. A bank overdraft is repayable on demand and can be reduced at review; a facility from a non-bank lender runs for an agreed term, which is precisely why businesses go looking for one after a bank has pulled or cut theirs. That situation has its own page on what replaces a withdrawn overdraft.
The four terms that decide the cost
In roughly the order they bite. The interest basis, which is whether the rate is charged per 30 days or annualised, and whether it runs on the daily balance or on the peak. The arrangement fee, which is payable up front whether or not the limit is used. The non-utilisation or commitment fee, charged on the undrawn portion. And the review or renewal terms, which say when the lender can reprice or withdraw the limit.
A facility with a low headline rate and a commitment fee on the undrawn balance can cost a lightly-used business more than one priced higher with no such fee. Working out which is which needs your expected utilisation, not the rate card. Terms on the unsecured products covering £50,000 run from 1 month to 120 months at September 2026, and a facility sits at the short end of that range far more often than the long one.
Who writes them on our panel
Revolving facilities sit inside our unsecured panel of 55 lenders rather than forming a separate category, alongside term loans and merchant cash advances, out of 200+ lenders across all products at September 2026. Two of the better-known facility products come from lenders we cover in detail: iwoca's Flexi-Loan, reviewed in our iwoca review, and Fleximize's Flexiloan, covered in our Fleximize review. Both pages carry the published figures and the date each was checked.
On eligibility the facility follows unsecured lending generally. 21 unsecured lenders on our panel will look at a business trading under a year and 5 at a genuine start-up, checked September 2026. A facility commits a lender for longer than a single advance, so the shortest lists here belong to the youngest businesses.
Every unsecured business loan lender on our panel
55 lenders, 135 live unsecured business loan products. Most brokers say “100+ lenders” and name none. These are ours, so you can check them. One enquiry is checked against the criteria of all of them before anything is submitted.
| Lender | Products | Size range | Rate span |
|---|---|---|---|
| Investec | 10 | £25,001 to £500,000 | 11.45% to 19.25% |
| Kingsway Finance | 10 | £25,000 to £350,000 | 15.2% to 36.5% |
| Admiral Leasing and Loans | 8 | £10,000 to £100,000 | 15.17% to 32.5% |
| Rivers Leasing | 8 | £5,000 to £50,000 | 21.2% to 32.5% |
| White Oak | 6 | £5,000 to £250,000 | 18% to 27.5% |
| Braemar Finance | 5 | £5,000 to £500,000 | 11.17% to 18.5% |
| Paragon Bank | 5 | — | 15.45% to 19.25% |
| Funding Circle | 4 | £10,000 to £750,000 | 6.9% to 25% |
| Oxbury Bank | 4 | £15,000 to £150,000 | 8.17% to 9.5% |
| Cubefunder | 3 | £5,000 to £50,000 | 30% to 48% |
| Fleximize | 3 | £10,000 to £250,000 | 10.8% to 46.8% |
| iwoca | 3 | £1,000 to £1m | 12% |
| Kingsley Asset Finance | 3 | £10,000 to £75,000 | 14.78% to 18.95% |
| Nucleus Commercial Finance | 3 | £5,000 to £500,000 | 14.5% to 53.88% |
| Playter | 3 | £30,000 to £500,000 | 15.96% to 36% |
| Swishfund | 3 | £15,000 to £100,000 | 13.2% to 35.04% |
| 365 Finance | 2 | £10,000 to £500,000 | 22% to 35% |
| Allica Bank | 2 | £25,001 to £150,000 | 9.9% to 13.75% |
| Bizcap | 2 | £5,000 to £1m | 27% to 49% |
| Capify | 2 | £5,000 to £500,000 | 20% to 44% |
Plus 35 further unsecured business loan lenders on the panel. The full roster is published on our lender directory.
Spans across each lender's unsecured business loan products on our panel, checked September 2026. These are not offers, quotes or rates you will be given, and a dash means we hold no published figure for that field. Rates move and lender criteria change. All lending is subject to status and the lender's own checks. Being on the panel is a fact about the panel: it is not an endorsement of CapExpand by any lender named, and implies no affiliation. Panel composition changes.
What a lender will ask for
Three to six months of business bank statements or an Open Banking connection, the last filed accounts, management figures where the filed set is stale, and a sentence on what the facility is for. Because the lender is sizing a limit rather than a single advance, the pattern in the statements does more work than on a term loan application: it is reading how often the balance dips and by how much.
Where the need is seasonal, saying so with the months named is worth more than a turnover figure. Enquiring does not affect your credit score.
See which lenders write facilities at your size
Trading time, turnover and the shape of the cash flow gap is enough for us to say which part of the panel is realistic before anything is submitted.
Check your optionsFinance arranged for UK limited companies, LLPs, sole traders and partnerships.
Sources and method
The utilisation table is arithmetic on an illustrative rate, stated as such, not a lender's pricing. Panel counts and amount bands are ours, with their capture dates above. Named lender products link to our own reviews, where the published figures and their check dates sit.
- Bank of England, money and credit statistics on UK business borrowing
- UK Finance, Business Finance Review: overdraft and loan approvals
- British Business Bank, Small Business Finance Markets
- FCA, consumer credit and the regulated perimeter
- Consumer Credit Act 1974, section 16B: the business-purpose exemption
Related funding
Revolving facility questions
What is a revolving credit facility?▼
A pre-approved limit a business can draw from, repay and draw again, with interest charged only on the balance outstanding rather than on the limit. It behaves like a business overdraft, but it is arranged as a standalone facility rather than sitting on a current account, which is why a business can hold one with a lender that is not its bank.
How is it different from a business loan?▼
A term loan pays out once and is repaid on a fixed schedule, so you carry interest on the whole amount from day one whether or not the money is needed yet. A revolving facility pays out when you ask and charges on what is out, so the cost tracks use. That makes a facility cheaper for a gap that opens and closes, and more expensive for a purchase you were always going to hold for three years.
Is a revolving credit facility cheaper than a term loan?▼
It depends entirely on utilisation, which is the point most comparisons miss. On an illustrative 1.5% per 30 days against a £50,000 facility, drawing the lot for twelve months costs £9,000 while drawing half of it for three months costs £1,125. The same headline rate produces costs an order of magnitude apart. Comparing a monthly facility rate with a term loan's APR without fixing the utilisation assumption compares nothing at all.
Do I pay anything if I never draw the money?▼
On interest, no: interest accrues on the drawn balance. Many facilities do carry a non-utilisation or commitment fee on the undrawn portion, and some carry an arrangement fee payable whether or not the limit is used. Those two lines are where an unused facility stops being free, and they sit in the agreement rather than in the headline rate.
How much can a business borrow on one?▼
The facility sizes on our panel follow the unsecured lending bands rather than a separate scale. At £25,000, 36 lenders on our panel have an unsecured product covering the amount; at £100,000 it is 45, checked September 2026. Those are panel products covering an amount on a date, not offers, and a facility limit is set on affordability rather than on what the band allows.
Can a business with adverse credit get a facility?▼
Possibly, on the same terms as any unsecured lending. At September 2026, 24 of the 55 unsecured lenders on our panel accept defaults or judgments that are settled or more than 24 months old, and 8 will consider repeated recent ones. A revolving facility asks a lender to commit for longer than a single advance does, so a patchy file tends to shorten the list faster here than on a one-off loan.
Is CapExpand FCA regulated?▼
CapExpand Ltd is not directly authorised by the Financial Conduct Authority. CapExpand Ltd (FRN 1060885) is an Appointed Representative of White Rose Finance Group Limited, which is authorised and regulated by the Financial Conduct Authority (FRN 630772). That appointment means White Rose Finance Group Limited is responsible for our credit broking, and both firms appear on the Financial Services Register at register.fca.org.uk. We are a credit broker, not a lender.