A Revolving Credit Finance Facility (RCF) is a flexible funding solution that provides businesses with a pre-approved line of credit through a finance provider such as ELS. RCFs are a far more adaptable option than traditional business loans and offer a range of benefits to help businesses manage their cash flow.
What is a Revolving Credit Finance Facility (RCF)?
An RCF is a flexible source of funding that allows businesses to withdraw money, repay it, and then withdraw again as needed, up to the pre-approved limit. It works similar to a credit card, providing businesses with the ability to manage their cash flow more effectively. This type of finance is designed for medium to large companies who require a flexible funding solution.
What are the Advantages of RCFs?
The main advantage of RCFs is their flexibility and unlike traditional business loans, an RCF does not require businesses to apply for funding each time they need it. Instead, companies have a pre-approved line of credit that they can draw on as needed. This flexibility makes RCFs one of the most cost-effective funding solutions available, allowing businesses to quickly access capital without the need for long-term commitments.
What is the difference between a Term Loan and a Revolving Credit finance facility?
A term loan, or standard business loan, is an approved amount of money that is repaid on an agreed schedule. An RCF is an approved maximum borrowing amount that allows businesses to borrow, repay, and then borrow again as often as they like up to the maximum limit.
Do you Pay Interest on Revolving Credit Finance Facilities?
Yes, when funds are withdrawn from an RCF, the agreed interest rate of the facility will be payable. The terms of the RCF can vary and our team at ELS will guide you through the available options to ensure you find the right financing solution for your business.
Key Features of Revolving Credit Finance Facility
• No requirement for Director’s Personal Guarantees
• Low interest rates
• Quick access to capital as a standalone product or to replace existing invoice finance facilities
Benefits of Revolving Credit Finance Facility
• A cost-effective replacement for bank overdrafts and term loans
• Secured on the trade debtor book only
• No floating charges or long-term commitments (minimum period is 3 months)
Eligibility for Revolving Credit Facility
To qualify for an RCF, your business must meet the following criteria:
• Have a turnover of at least £1M in the last 12 months
• Be a UK Ltd or PLC
• Have been trading for a minimum of 3 years
Other Finance Options
If your business does not qualify for an Revolving Credit Finance Facility, our team at ELS will help you explore other finance options that may suit your needs. We offer a range of bespoke finance products to help businesses grow and succeed. Contact us today to discuss your options take a look at our alternative finance options.
Maintain a good credit record and keep within your facility terms and you can operate the revolving credit finance facility for as long as you need it.
Applying for a Revolving Credit Finance Facility
To apply for an RCF, you will typically need the following information:
• Latest financial accounts
• 6 months of business bank statements
• Aged debtor and creditor report
• Up-to-date management information