Revolving Credit Facility (RCF) for SMEs

A revolving credit facility (RCF) is a pre-approved line of credit a business can draw down, repay and redraw repeatedly across the life of the agreement. It works very much like a corporate overdraft but is structured as a standalone committed facility, usually from £25,000 up to £5m+, with a clearly defined limit, term and pricing schedule. You pay interest only on the drawn balance, plus a small non-utilisation fee on the undrawn portion.

RCFs have become the standard working capital tool for UK SMEs ever since the high street banks quietly pulled back on traditional overdrafts. Where a bank overdraft can be withdrawn on 30 days' notice and is reviewed annually, an RCF is contractually committed for the agreed term (typically 12-36 months) and cannot be pulled at will.

The use cases are everything a healthy growing business actually needs: smoothing payroll across a slow month, paying suppliers early to grab settlement discount, covering VAT and corporation tax timing, funding a stock build for a seasonal peak, taking on a contract that delays cash for 60-90 days, or simply having dry powder for opportunistic acquisitions.

Doulton arranges both unsecured and secured RCFs. Unsecured facilities typically cap around £500k-£750k and price off a margin over base rate. Secured facilities (against commercial property, debtors or assets) scale to £5m+ and price tighter. We benchmark across roughly 25 active RCF providers, which is the realistic universe in the UK market.

An RCF is the cheapest form of flexible business credit available outside of high street overdrafts. For a profitable SME with two years of trading, it is almost always a better tool than rolling short-term loans, merchant cash advances or invoice discounting.