Revolving credit facility and business line of credit

A credit limit your company can draw on, repay and draw again, paying interest only on the amount it uses. It works like a flexible credit line: as you repay, the available balance tops back up. Banks offer annual credit lines and overdrafts, and some non-bank lenders offer rolling facilities where each drawing is repaid within a set period.

The lender approves a limit, and your company draws funds when it needs them, up to that limit. Interest runs only on the balance drawn, and as you repay, the available credit goes back up. Some lines require each drawing to be cleared within a set period. The limit is usually reviewed every year and can be raised, reduced or withdrawn.

It depends on what you need. An overdraft sits on your business current account and is usually repayable on demand. A revolving facility can be a separate account with its own limit and rules, sometimes requiring each drawing to be repaid within a set number of months, and it may come from a non-bank lender. Compare the limit, all fees and how easily each can be reduced.

Lenders look at turnover, cash flow, profit, existing borrowing and how the company has handled credit, including its Central Credit Register report. The limit is usually reviewed every 12 months, and it can be increased, reduced or withdrawn at review depending on trading. Some lenders also want the balance cleared for a period each year.

Sometimes. Some lenders charge an arrangement fee when the facility is set up, an annual renewal fee or a charge on the unused part of the limit, as well as interest on what you draw. Ask each lender for a written breakdown of every charge, so you can work out the real cost of keeping the facility open.

Yes. Most facilities can be reviewed, reduced or withdrawn, and overdrafts are often repayable on demand. The facility letter explains when this can happen and how much notice you get. Regulated lenders must follow the Central Bank's SME Lending Regulations, so ask the lender to explain its decision in writing if your limit is cut.

No. The Growth and Sustainability Loan Scheme excludes overdrafts, credit lines and revolving loans. It only funds new term loans with a fixed repayment schedule for eligible projects, applied for directly with a participating lender. Our SBCI page explains how the scheme works and how to apply.

It depends on the need. A revolving facility suits uneven, recurring costs where you want funds on standby and pay interest only on what you draw. A term loan suits a one-off spend with a known amount, and its fixed repayments are easier to budget. Easy access to a credit line can turn into permanent borrowing, so review your usage regularly.

Possibly. Your own bank is usually the first place to ask about a credit line or overdraft. Tell us what your company needs and we'll tell you honestly whether our panel can help, or where to apply instead.

No. An overdraft sits on a business current account, so it comes from the bank that holds your account. Bank of Ireland, for example, offers business overdrafts of €1,000 to €500,000 online, as a 12-month facility that is repayable on demand. If your bank will not offer or extend one, a revolving credit facility or a working capital loan from a non-bank lender can do a similar job.