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Business Loan: What is a Revolving Credit Line (RCL)?

8 February 2023

, posted by 

Aldean Moch Rafli


A revolving line of credit is a a great financing option for businesses, especially SMEs. It enables them to take on growth opportunities and tackle cash flow gaps which may happen in the course of running their business. Most of the time, businesses may not always have the required capital, making revolving credit lines an essential type of business loan.

Here is a detailed guide about revolving lines of credit, along with examples, advantages, and other important information you need to know.

What is a revolving credit line?

Simply, a RCL is a pool of money that borrowers can access whenever they need to. Borrow any amount within the credit limit, and repay based on the amount used with interest. Upon repayment, the credit limit is replenished back to full, and you can continue borrowing.

Thus, it’s a great option for businesses that periodically need working capital for various needs.

Here are some examples of how this financing solution can be used in different industries:

Food & Beverage

  • Finance accounts receivable and inventory
  • Support new purchase orders


  • Purchase materials
  • Labor costs
  • Managing payroll 


  • Deal with unexpected orders 
  • Fleet and fuel
  • Warehousing needs and inventory
  • Supplier fees

As seen from the above examples, RCLs can be useful especially as businesses cannot always rely on sporadic customer payments, and there might be sudden or seasonal increases in demand.

How does a revolving credit line work?

After the borrower has been approved for a RCL, a maximum limit will be set for the line of credit based on the borrower’s credit score, credit history, and income. The total amount available can be used at once or spent as needed.

By the end of the billing cycle, the borrower gets a billing statement with a required minimum payment. The borrower only needs to repay the amount borrowed instead of the full credit. However, they can also choose to pay off the entire statement balance, another amount, or the minimum payment. After the payment, that amount becomes available to borrow again. The balance that is carried over to the next billing cycle will then be subject to fees and interest.

What are some examples of revolving credit line?

Here are some examples:

Business line of credit

A business line of credit is a popular type of business loan that is commonly issued by banks and alternative lenders. This line of credit is frequently used among business owners as there is more flexibility to finance seasonal expenses or growth opportunities.

Credit card

Credit cards are the most well-known type of revolving lines of credit. As long as you make the minimum payments every month, you can pay off the items you charge for your business  within your credit limit on your own schedule.

Personal line of credit

A personal line of credit is secured by assets. However, some lenders provide unsecured lines of credit to borrowers who are highly qualified.

What are the advantages of a revolving credit line?

Flexible repayment terms

For smaller businesses, revolving credit lines are often more ideal since there is the option of paying just the minimum amount due. This is less straining, especially when cash is tight.

Get cash on demand

In contrast to regular loans, a revolving line of credit allows borrowers to secure funding in advance by giving access to funds that can be used at any time needed. With ready access to funds, the business’ short-term or urgent cash needs can be taken care of.

Flexibility of use

Borrowers can decide how they want to use the borrowed funds, whether to purchase equipment, pay for unexpected expenses, deal with seasonal order surges, any many more. Moreover, there is no such thing as over-borrowing and paying for supplies that won’t be used.

Faster processing

Due to the fewer documents required and not having collaterals, RCL applications are processed faster, allowing business owners to gain access to the cash they need more quickly as compared to a traditional loan.

Revolving Line of Credit FAQs

How to qualify for a revolving line of credit?

The requirements depend on the lender that you choose, so do ample research on the lender you are interested in. Generally, you will be required to prepare your company’s balance sheet, income statement, and cash flow statement to establish your ability to repay the loan.

What is the difference between a revolving line of credit and a line of credit?

Revolving lines of credit remain open until the lender or borrower closes the account. They also have maximum limits and monthly payments. A non-revolving line of credit, or simply a line of credit, is a one-time arrangement, in which the account will be closed by the lender once the credit line is repaid.

How to get a RCL?

These are the steps to get a revolving line of credit:

Step 1: Research and pick a lender

Banks and alternative lenders such as Fazz Business provide revolving lines of credit. Take a look at the requirements, eligibility criteria and interest rate before you apply. 

Step 2: Make your application

Compile the required documents and submit your application. Nowadays, most applications for a revolving credit line can be done online on the lender’s website.

Step 3: Accept terms and close

If you qualify for a revolving line of credit, you will be given a term sheet to review before accepting and closing on your loan, which may involve signing an agreement. Once the deal is made, you will be able to access your fund within days.

Grow your business with a Fazz Business Loan

Fazz offers a Revolving Credit Line for business owners to accelerate their growth with quick, ready access to working capital. With Fazz Revolving Credit Line, borrowers can obtain credit on demand without any hidden costs. The repayment options are also flexible, allowing you to pay at your own pace.

Our interest rate starts as low as 2% per month depending on your credit assessment with approval within 48 hours, and a validity period of 12 months. Apply for a Fazz Business Loan here for financing that drives business results!


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