How does a revolving credit facility work? (And is it right for your business?)
Updated on 27 May 2026.
Part of our Revolving credit facility guide.
The mechanics of a revolving credit facility explained for UK SMEs, with a worked illustrative example showing how the cost compares to a term loan. If the product concept is new to you, our plain-English definition is the natural first read.
The worked example below is an illustrative composite. Individual results vary.
The core mechanic: draw, repay, revolve
A revolving credit facility gives your business access to a pre-approved credit limit. You draw funds from that limit when you need them, repay when you have the cash, and the repaid amount becomes available to draw again. The draw-and-repay cycle is unpacked in draw down and repayment explained.
It’s not a one-time loan. There’s no fixed repayment schedule. You don’t receive a lump sum and then work through a set number of monthly instalments.
The simplest analogy: imagine a reservoir with a defined capacity. You draw from it when you need water. When it rains (when revenue comes in), the reservoir refills.
A worked example (illustrative)
A UK e-commerce business, an online homeware retailer turning over £2.5M per year. They carry significant inventory and typically need to pay suppliers 60 to 90 days before the goods sell. Juice approves them for a £150,000 revolving credit facility.
Across the next 4 months, the business draws and repays in rhythm with their inventory cycle. At no point did the business take the full £150,000. At no point did they pay interest on the full £150,000.
Compare that to a term loan: the business would have received £150,000 in January and started paying fixed monthly instalments from the following month, with interest accruing on £150,000 from day one. The deeper comparison is in revolving credit facility vs term loan.
How interest is calculated
One of the most important features of a revolving credit facility is that interest accrues only on the amount you’ve drawn, not on the full credit limit. You’re never paying for money you haven’t used. The day-by-day mechanics are set out in how is interest calculated on a revolving credit facility.
Interest is typically charged monthly and calculated on the average daily balance.
The repayment cycle
Unlike a term loan, there is no fixed monthly repayment amount with a revolving credit facility. This flexibility is designed to match the reality of business cash flow, which is rarely smooth.
With Juice Flex, there are no early repayment penalties. If a big payment comes in and you want to repay the full balance tomorrow, you can do that and you’ll immediately stop accruing interest on the repaid amount.
What it costs: the fee structure
When comparing two lenders on cost, the only fair comparison is the total cost of funds for your expected usage pattern.
How drawdowns work in practice
Once your revolving credit facility is live, accessing funds is straightforward. The process is designed to be quick. When a supplier payment is due or a business opportunity materialises, you don’t want to be waiting days.
When a revolving facility makes sense
The product works best for businesses where cash flow is variable or cyclical, where the timing of revenue doesn’t perfectly match the timing of expenses. Five sector examples are in real-world examples of revolving credit in action.
When a revolving facility might not be the best fit
Ready to check your eligibility?
Juice Flex is available to UK limited companies and LLPs with monthly turnover of £20,000 or more. Facilities run from £50,000 to £1,000,000, subject to status and lending criteria. Checking your eligibility uses a soft credit search, so there’s no impact on your credit score.