Calculator
Illustrative example figures. The default values are examples only, not quotes or market rates. Replace them with figures from a lender.
Schedule
Assumptions and definitions
- Utilisation is the average share of the limit drawn, assumed constant across the term. Real usage varies.
- Interest is charged monthly on the drawn amount at (SONIA assumption + margin) or the fixed rate; SONIA is held flat. The SONIA default is an illustrative assumption, not the current published rate.
- The non-utilisation fee is charged monthly on the undrawn amount; the arrangement fee is paid upfront on the full limit. Drawn balance is repaid at the end of the term.
- Effective annual rate is an APR-like measure: the internal rate of return (IRR) of the cash flows (money received after upfront fees, then every payment and fee), compounded to a yearly figure as (1 + monthly IRR)12 − 1. It is not a lender's quoted APR and excludes costs not entered here.
- Results are rounded estimates for illustration and are not an offer of credit.
What a revolving facility is for
Most businesses do not need the same amount of cash every week. A wholesaler buys stock ahead of the busy season; a contractor pays wages for a month before the client pays the first valuation; a growing agency takes on staff before the invoices catch up. A revolving facility covers that kind of gap, and you only pay interest while the money is drawn.
It is the wrong tool for buying premises or a long-life machine. If the balance never comes down, the facility has become a term loan in disguise, priced and reviewed like short-term money. That is usually the moment to move the hard-core borrowing onto a term loan or asset finance.
Overdraft or committed RCF?
| Feature | Overdraft | Committed RCF |
|---|---|---|
| Where it sits | On your business current account | A separate facility, drawn in tranches |
| Term | Usually reviewed every year | Commonly one to five years, sometimes with extension options |
| Can the bank withdraw it? | Usually repayable on demand | Not while you meet the terms and covenants |
| Typical user | Smaller businesses with day-to-day swings | Established businesses with well-prepared accounts |
Limits are sized on turnover and cash flow. Asset-based lenders work differently: they set a borrowing base against your receivables, stock or plant, so the limit moves with the book.
How it is priced
- Interest on the drawn balance: a margin over a benchmark such as SONIA or Bank Rate, or occasionally a fixed rate.
- Arrangement fee at set-up, usually a percentage of the full limit whether or not you draw it.
- Non-utilisation (commitment) fee on whatever you leave undrawn.
- Renewal, monitoring and legal fees, which are easy to overlook when comparing quotes.
The calculator shows why a large, mostly idle limit can cost more than its headline rate suggests. Lower the utilisation slider to see the effective rate rise.
See UK lenders offering revolving credit →
What the bank will ask for
Your relationship manager writes a credit paper, and a credit committee (or someone with sanctioning authority) signs it off. The core question is serviceability: can the business carry the facility with room to spare? Expect to provide:
- Filed accounts and recent management accounts, ideally with aged debtor and creditor lists.
- A monthly cash flow forecast for the next year, showing the peak drawing and when it clears. A forecast that never returns to zero invites the question of whether this is really working capital.
- Details of existing borrowing and any security already given.
- The credit history of the company and its directors.
Some lenders can offer facilities under the government’s Growth Guarantee Scheme, subject to its rules.
Security, guarantees and covenants
A debenture gives the lender fixed and floating charges over the company’s assets, and charges are registered on the company’s public record at Companies House. On smaller facilities the directors are often asked for personal guarantees. A guarantee may be limited to a set amount or unlimited, so check the amount and the release conditions carefully, and take independent legal advice before signing.
Committed RCFs carry financial covenants, for example minimum interest cover or maximum leverage, tested from the management accounts you send. A breach does not automatically end the facility, but it gives the bank grounds to reprice or ask for more security.
Where it goes wrong
An overdraft gets used as permanent funding and is cut at the annual review, just when it is needed most. Fees on a generous limit that is rarely drawn eat into the saving. A floating rate rises while the forecast assumed it would stay flat. Covenants set in a good year get tested in a bad one. Allow for each of these in your forecast.
Who provides it
High street and challenger banks provide most overdrafts and RCFs. Asset-based lenders offer revolving facilities secured on receivables, stock or plant, and some alternative lenders run online credit lines with faster decisions and higher pricing.
Frequently asked questions
What is the difference between an RCF and an overdraft?
Both let you draw, repay and redraw up to a limit. An overdraft sits on your current account, is normally reviewed each year and can usually be withdrawn on demand. A revolving credit facility (RCF) is a separate, committed facility with a written agreement and a fixed term, Typically the bank can withdraw it early only if you breach the agreement, so check the events of default in yours. RCFs are more usual for established, larger businesses.
What is a non-utilisation fee?
A fee on the part of a committed facility you leave undrawn. The bank has to hold capital against the whole limit, drawn or not, and this fee pays for that. It is quoted as an annual percentage of the undrawn amount, or sometimes as a share of the margin.
What is SONIA?
SONIA (the Sterling Overnight Index Average) is the sterling overnight interest rate benchmark administered by the Bank of England. Floating-rate facilities often charge a margin over SONIA, usually compounded in arrears. We do not quote a live figure: check the Bank of England for the current published rate.
Will I need security or a personal guarantee?
Often, yes. Larger facilities are usually secured by a debenture over the company’s assets. For smaller companies, banks commonly ask the directors for personal guarantees as well, because the company’s own assets may not cover the limit.
Can I use an RCF for seasonal stock?
Yes. It is one of the best uses: draw in the months you buy stock, repay as it sells, and pay interest only while the money is out.
Sources and further reading
- Bank of England: SONIA interest rate benchmark
- Bank of England Database (published SONIA series)
- Bank of England: Bank Rate
- British Business Bank: debt finance options
- British Business Bank: Growth Guarantee Scheme
- GOV.UK: finance and support for your business
- FCA Financial Services Register
Links checked 17 Oct 2026. RaiseDebt does not state live market rates; check the source for current figures.