Revolving Credit Facility Statistics UK 2026

Revolving credit facilities, often called RCFs, are back in focus in the UK. Many businesses want flexible funding. They want to draw cash when they need it, repay it, then draw again. That is the core promise of an RCF.

But the story in 2026 is not only “more credit” or “less credit”. It is a shift in the mix of borrowing. By December 2025, businesses kept pulling back from overdrafts, while revolving credit expanded sharply, as shown in Experian’s UK monthly credit trends reporting. See the Experian Monthly Credit Trends Report (M Index, January 2026).

This post explains what the latest UK SME statistics tell us about RCFs in 2026. It also explains what lenders look for, what costs to expect, and how to manage an RCF so it stays helpful, not harmful.

Key takeaways for 2026 (the stats that matter)

If you only read one section, read this one. These numbers explain why “revolving credit” is a hot topic again.

• Utilisation fell hard in 2020. In late 2020, only about one-third of available SME overdraft limits were in use. Before Covid, it was closer to 60%.
• Fewer SMEs went shopping for new overdrafts. One survey found the share of SMEs seeking new overdrafts dropped from 19% in 2019 to 3% in 2021.
• External finance use stayed lower than many expect. In 2024, about 45% of SMEs used any form of external finance. In the same year, about 11% used a bank overdraft, and about 15% used business credit cards.
• Approvals rebounded in 2024. UK Finance reports loan and overdraft approvals rose year on year, see Gross lending to SMEs up in 2024 (UK Finance).
• Revolving balances rose, term loans fell. By end-2025, SME revolving credit debt was about 22.6% higher than a year earlier. Term loan balances fell by about 6.7%.
• Average limits look healthy, but the median is small. Typical SME overdraft or RCF limits average about £20k to £35k. Yet the median sits around £3k to £5k.
• Many firms use only 40% to 50% of what they have. Even by 2024 to 2025, average overdraft utilisation stayed below 50%, and many SMEs kept large headroom.
• Fees are common. Around 55% to 60% of SME overdrafts carry setup or renewal fees. Renewals tend to happen every year, even when the facility feels “evergreen”.

Those points explain a key theme for 2026. Many SMEs want flexible credit again. Yet they also want control. They are keeping lines open, but they do not always draw heavily.

What a revolving credit facility is, and how it differs from an overdraft

An RCF is a credit line. Your lender sets a limit. You can draw money up to that limit. You pay interest on what you use, not on the full limit. When you repay, the available limit “revolves” back up. That is why it is called revolving credit.

If you want a plain-English definition with examples, see our guide on revolving credit loans.

In the UK SME world, the most common form of revolving credit is the bank overdraft. Many people treat “overdraft” and “RCF” as the same thing. They are close cousins, but not always identical.

Here is a simple way to think about it:

• Overdraft: A revolving line attached to your current account. You dip below zero, then come back up when cash lands.
• RCF (credit line): A revolving line that may sit alongside your account. It can work like an overdraft, or like a separate drawdown facility.
• Term loan: You take a lump sum. You repay it on a schedule. It is built for longer-term spending. (See term loans.)

The biggest practical difference is how you use the money. Term loans fund long projects. They suit equipment, vehicles, property, and expansion. Revolving facilities suit short gaps. They cover wages while you wait for invoices to pay, or stock while you wait for peak season sales.

The other difference is cost. Revolving facilities often cost more when you use them for a long time. They can include arrangement fees, and sometimes fees on unused limits. A term loan can look cheaper for steady borrowing. But an RCF can be cheaper for short bursts, because you only pay interest for the days you draw funds.

The big shift since 2020, why SMEs kept facilities but used them less

To understand 2026, you need to look back to 2020. In the early pandemic months, many SMEs rushed to secure credit. They wanted a safety net. Overdrafts and RCFs were one way to get that.

Then the market changed fast. Government-backed loans became widely available. Many firms took those loans. They used them to build cash buffers. That reduced the need to draw on overdrafts day to day.

The numbers show the shift clearly. In late 2020, only about one-third of available SME overdraft limits were in use. Before Covid, it was close to 60%. That drop signals a simple behaviour: SMEs kept facilities open, but left them mostly undrawn.

Demand also fell for new overdrafts. One survey found the share of SMEs seeking new overdrafts fell from 19% in 2019 to 3% in 2021. When cash buffers are high, fewer firms want to pay for standby credit.

This period matters because it changed expectations. Many business owners learned they can survive with less bank borrowing, at least for a while. Others learned the opposite, that when cash gets tight, the fastest help is often a revolving line.

By 2023, the picture was still cautious. Fewer SMEs used external finance than before 2020. But the need for flexible credit did not disappear. It just waited for the right conditions.

2024 to 2025 rebound, approvals rose, revolving balances rose faster than term loans

In 2024, SME credit activity improved. Approvals for new or increased facilities started to rise after the low points of 2023.

UK Finance data shows the number of loan and overdraft facilities granted to SMEs in 2024 jumped by 33% compared to 2023. The total value rose by around 4%. UK Finance also reports overdraft approvals increased by 47% to just under 59,000, and loan approvals increased by 23% to just under 45,000. Read the full update here: Gross lending to SMEs up in 2024 (UK Finance).

That gap between volume and value tells a story. More facilities were granted, but not much more money. This often happens when many firms take small limits, or when lenders grant lines but keep limits tight.

By early 2025, approvals were at the highest quarterly volume since early 2022. At the same time, credit bureau data showed a stronger move toward revolving credit.

By end-2025, the total revolving credit debt held by SMEs was about 22.6% higher than a year earlier. Yet outstanding term loan balances fell by about 6.7% over the same period.

This mix shift matters for planning. Revolving credit can be a good tool, but it can also hide risk. A term loan forces a long repayment plan. Revolving credit can drift into “permanent debt” if you never pay it down.

Another metric makes the shift easy to picture. By end-2025, average SME revolving credit balances were roughly 2.9 times their 2019 level. Average term loan balances were only about 1.2 times 2019 levels. That suggests SMEs chose flexibility, even when it cost more.

How big are UK SME facilities in practice, average vs median tells the real story

When people talk about RCFs, they often picture large limits. Some businesses do have big facilities. But the typical SME limit is smaller than most headlines suggest.

Survey data shows the average overdraft or RCF limit for SMEs is about £20,000 to £35,000. Yet the median is only around £3,000 to £5,000.

That average-to-median gap is a warning sign. It means a small group of firms have very large limits, and most firms have small limits. If you plan cash flow based on the average, you may set the wrong expectations.

The data also shows differences by owner profile. Male-led SMEs reported a mean overdraft limit of about £34,500, with a median of £4,000. Female-led SMEs averaged about £19,800, with a median of £3,000. This gap can reflect different firm sizes, ages, or sectors. It can also reflect how credit risk is assessed.

Limits also rise with business size. Micro businesses are less likely to have an overdraft or RCF. Small and medium firms use them more. Higher turnover tends to unlock larger lines. In practice, many banks set limits using turnover and working capital needs as a guide.

Utilisation trends, why many SMEs use only 40% to 50% of the limit

Limit size is only half the story. The other half is utilisation, how much of the limit you actually use.

Before Covid, it was common for about 50% to 60% of overdraft limits to be drawn at any given time. During the pandemic, utilisation dropped sharply. In late 2020, only about 33% of available SME overdraft funding was in use. Firms had emergency loans and larger cash buffers.

Even by 2024 to 2025, utilisation did not return to pre-pandemic highs. UK Finance notes “little movement” in utilisation across SMEs, see the same UK Finance update: Gross lending to SMEs up in 2024.

By end-2025, the proportion of business current accounts in overdraft hit multi-year lows, while alternative revolving credit expanded, as flagged by Experian’s M Index (January 2026).

Put simply, more businesses are using revolving credit, but not always via overdrafts. And many firms use only about 40% to 50% of their available revolving limits on average. They keep the rest as a buffer.

This behaviour makes sense. A revolving facility is a safety net. If you use it all the time, you lose that safety. You also pay more interest. Many finance teams now treat headroom as a risk control tool.

Fees, annual reviews, and why “revolving” does not mean “guaranteed”

Many founders think of an overdraft as permanent. It sits there year after year. It looks like part of the bank account.

In reality, most bank revolving facilities include an annual review clause. The lender reviews the business each year. They can renew, adjust, or revoke the facility. Some facilities do roll over for years. Some are even marketed as “reviewable overdrafts” with no fixed end date. But the key point is this, the bank keeps the right to change terms.

Fees also show up more often than people expect. Banks charge arrangement fees on a majority of SME overdrafts. Around 55% to 60% pay a setup or renewal fee. Some facilities also include a commitment fee on unused funds, or an annual service fee.

If a business performance worsens, or if it breaches covenants, the bank may reduce or call in the facility on review, sometimes on short notice. That is why it is risky to treat an RCF as guaranteed cash.

If you want to understand a common lender ask, see our guide on personal guarantees in business loans.

When you build your cash plan for 2026, treat your RCF like a tool with rules. Know the review date. Track what the bank cares about. And do not assume your limit will always stay the same.

Sector patterns, who relies on RCFs most, and why

Not every sector uses revolving credit in the same way. Some sectors have more uneven cash flow. Some have to pay suppliers long before customers pay them. Those firms have stronger reasons to keep an RCF.

Research highlights a few sectors with higher RCF and overdraft use:

• Agriculture: Farming businesses often face large seasonal costs, then delayed income. Many use overdrafts to buy inputs months before harvest revenue arrives.
• Wholesale and retail: These firms must buy stock before they sell it. Revolving credit helps them bridge that gap.
• Manufacturing: Manufacturers pay for materials, labour, and production before sales receipts arrive.
• Construction: Construction firms often cover upfront project costs, then wait for stage payments. That can increase reliance on working capital lines.
• Hospitality and recreation: These firms can be seasonal and can see sharp swings in demand.

Across 2023 to 2025, many sectors retained unused credit capacity. Utilisation rates stayed below pre-pandemic norms across the board. That points to a cautious approach, even in sectors that value flexible credit.

Regional patterns, where finance use recovered faster

RCF use also varies by region. The UK has large differences in local business mix, bank presence, and funding options.

For deeper regional context, see the British Business Bank Nations and Regions Tracker 2025, which covers geographic patterns across small business finance markets.

Some regions show higher use of external finance. Northern Ireland and parts of the North of England often show stronger use of debt products per SME than the UK average. Other regions show lower use and may rely more on internal funds or non-bank options.

These regional patterns matter for two reasons. First, they help you benchmark your access to finance. Second, they help explain why lenders may behave differently across the UK in 2026.

Rates and pricing, why cost became a bigger issue, and what changed in 2026

Cost is one of the biggest reasons SMEs shifted how they use revolving credit.

As base rates rose between 2021 and late 2025, many overdraft costs moved higher, and some were reported in the 8% to 12% range in 2023 and 2024. That is expensive for long-term borrowing.

In early February 2026, the Bank of England held Bank Rate at 3.75%. See the official release: Monetary Policy Summary and Minutes (February 2026). You can also read the broader context in the Monetary Policy Report (February 2026).

Still, do not assume your cost will drop in a straight line. Many RCFs price off base rate plus a margin. Lenders can also change fees at renewal. And if your risk profile worsens, your margin can rise even if the base rate falls.

When you assess RCF pricing in 2026, look at the full cost:

• The interest rate and how it is set (base rate plus margin, or a fixed rate).
• Arrangement fees for setup and renewal.
• Commitment fees on unused limits, if they apply.
• Any service fees linked to the account.

Then compare that full cost to alternatives. A term loan can suit stable, longer-term borrowing, see term loans. Invoice finance can suit firms with large receivables, see the best invoice financing lenders in the UK. Some firms also explore supply chain finance when supplier terms drive the gap.

2026 trend watch, why many firms are “over the overdraft” but still want revolving credit

By December 2025, UK credit data showed a clear split. Businesses kept pulling back from overdrafts, while revolving credit expanded sharply, as explained in Experian’s M Index (January 2026).

This fits what many finance teams feel on the ground. Overdrafts can be blunt. They can be reduced at review. They can become expensive if you rely on them every month. So some firms look for structured RCFs instead, or they use other revolving products.

Lender appetite can also change. The Bank of England tracks this in its quarterly credit surveys. If you want the official view of how lenders reported conditions in late 2025, see the Bank of England Credit Conditions Survey (2025 Q4).

This is the key point for 2026. RCFs remain available, but access is more conditional than it was before 2020. Cost and scrutiny are part of the trade.

A real-world institutional example, FSCS is enhancing its own RCF

RCFs are not only for SMEs and large corporates. They also matter for financial system plumbing.

In January 2026, the Financial Services Compensation Scheme (FSCS) planned an enhanced revolving credit facility. FSCS says its budget includes an additional £11m for an enhanced RCF. See the official update: FSCS Budget Update (January 2026).

There is also related consultation material from regulators, including the FCA’s consultation page here: FCA CP26/2 (FSCS management expenses levy limit 2026/27).

Why include this in an SME blog? Because it shows a wider point. Revolving credit is a core tool in UK finance. When the system wants more “funding readiness”, it often turns to an RCF. In 2026, that mindset is filtering back into business finance too.

How to decide if an RCF is right for your business in 2026

RCFs can be a smart tool. They can also create hidden risk if you use them the wrong way. So the best question is not “Can I get an RCF?” It is “Should I use an RCF for this need?”

Here are the most common good-fit use cases for SMEs.

Working capital gaps

This is the main use of an RCF. You draw on the facility to pay suppliers, rent, or salaries when cash out goes out before cash comes in. A common example is a business waiting for a large invoice to be paid. The RCF acts as a bridge, so operations do not stall.

Seasonal and cyclical needs

Many SMEs have seasonal swings. Retailers build inventory before Christmas. Farmers pay for inputs long before harvest. Tourism firms staff up before peak season. An RCF fits this pattern. You draw during the build-up, then repay after sales arrive.

Emergency fund and contingency

Many SMEs keep a facility “just in case”. It can cover an equipment breakdown, a sudden tax bill, or an unexpected large order that needs upfront working capital.

Now, here are signs a term loan, or another tool, might be better:

• You will need the money for more than 12 months.
• You plan to use most of the limit all the time.
• The RCF has high fees, and you will not use it often.
• The lender can reprice or reduce the limit at renewal, and that would break your plan.

If those red flags apply, explore a term loan, invoice finance, or staged funding. If you want options, see our round-up of the best term loan lenders in the UK for 2026.

How to manage an RCF well, and avoid nasty surprises at review time

Most RCF problems come from one issue, the facility becomes normal spending money. It turns from a buffer into a habit. Then, when the bank reviews the line, the business feels trapped.

Here are practical ways to manage an RCF in 2026.

1) Treat the RCF as a bridge, not a budget

Set a clear rule for what the RCF can pay for. Tie it to short-term timing gaps. Avoid using it for long-term costs, like a long hiring plan or a multi-year project.

2) Build a simple 13-week cash flow forecast

You do not need a complex model. You need a forecast you update every week. Track key inflows and outflows. Then map when you expect to draw and repay the RCF. This helps you avoid slow creep in the balance.

3) Protect headroom

Remember the utilisation trend. Many SMEs use only 40% to 50% of their limit. That is not a weakness. It is a control. Set a target maximum draw, such as 60% of the limit, so you always have space for surprises.

4) Know your review month, and prepare early

Annual reviews are normal. Prepare two to three months before the review date. Gather management accounts. Explain any dips in profit. Show your cash forecast.

5) Understand what could trigger a reduction

Banks can reduce or call in facilities if performance deteriorates, or if covenants are breached. They may also tighten terms in stressed sectors when risk rises. If you are unsure what type of facility you have, start with secured vs unsecured business loans in the UK, because security can affect terms and review pressure.

6) Look at the total cost, not only the interest rate

Fees matter. Many facilities charge setup and renewal fees. Some charge fees on unused limits. Add it all up. If you rarely draw the line, you may be paying for insurance.

7) Keep options open

If the lender reduces your limit, you need a plan B. That plan can be a second bank relationship, invoice finance, or a cash buffer target. You do not need five funding lines. You need at least one alternative path.

Also, if you use business credit cards as a revolving tool, compare products carefully. See our guide to top business credit cards providers in the UK.

Good RCF management is not about using less credit. It is about using credit on purpose. That is the theme of the UK stats since 2020, too. Many SMEs keep facilities open, but they draw cautiously.

Conclusion: what the 2026 statistics suggest, and what to do next

The UK revolving credit story in 2026 is a story of shape shift. Overdraft use remains muted. Many current accounts are no longer overdrawn. Yet revolving credit has expanded sharply, and SMEs have leaned into flexible lines more than term loans.

The SME research shows why. Approvals rose in 2024. Revolving balances rose again in 2025, while term loans fell. Average limits can look healthy, but the median is small. Utilisation remains below pre-pandemic norms, with many firms keeping large headroom.

For business owners, the message is clear. Revolving credit can be a strong tool for cash flow gaps, seasonal swings, and emergencies. It can also turn expensive and risky if you use it for long-term funding. In 2026, lenders also apply more scrutiny at reviews, and fees remain common.

Your next step is simple. Audit your facility. Check the limit, the fees, the review date, and your average utilisation. Then decide what the line should do for you this year. If it supports your cash cycle, keep it. If it has become permanent debt, consider a better structure.

If you want wider context on how SMEs fund growth beyond banks, see our overview of UK alternative lending statistics.

Data note: Most public datasets land with a lag. Full 2026 calendar-year totals will be confirmed in later releases. Use date-stamped sources, and review your plan as new updates land.

Sources and further reading

• Bank of England, Monetary Policy Summary and Minutes (February 2026)
• Bank of England, Monetary Policy Report (February 2026)
• Bank of England, Credit Conditions Survey (2025 Q4)
• UK Finance, Gross lending to SMEs up in 2024
• UK Finance, Business Finance Review (data hub)
• British Business Bank, Nations and Regions Tracker 2025
• Experian UK, Monthly Credit Trends Report (M Index, January 2026)
• FSCS, Budget Update (January 2026)
• FCA, CP26/2 on FSCS management expenses levy limit 2026/27