Cash flow finance

Property-backed revolving credit facilities for businesses

A revolving credit facility secured on property: draw, repay and redraw from £50,000 to £10 million. How secured RCFs work, LTVs, costs and what lenders check.

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Facility size: £50,000 to £10 millionDepending on the lender
Loan to value: Usually up to 70% to 75%Lower for hospitality and land
Term: Up to five yearsUp to three years with some lenders
Security: First or second charge on propertyPersonal guarantees normally required

In short

A property-backed revolving credit facility gives a business a credit limit secured on commercial or residential investment property, which it can draw, repay and draw again during the term, paying interest only on what it uses.

Specialist lenders on our panel offer facilities from £50,000 to £10 million, usually up to 70% to 75% of the property's value, over terms of up to three years with some lenders and up to five years with others. Directors normally give personal guarantees.

About property-backed revolving credit facility

A property-backed revolving credit facility works like a large, secured overdraft.

A lender sets a limit against property your business or its directors own, and you draw on it when you need cash, repay when money comes in and draw again, for as long as the facility runs. Because the lender has a charge over property, the limits are far higher than an unsecured facility and the money can be used for things a cash-flow lender would not fund, such as buying more property.

Smart Funding Solutions is a broker. We search the market for specialist lenders that offer revolving facilities secured on property and compare them with the alternatives. If you are looking for a facility without property security, see our main guide to the revolving credit facility.

Funding needs

What businesses use a secured revolving facility for

Buying property quickly
funds ready to draw for auction purchases or below-market opportunities, without arranging a new loan each time.
Refurbishment
paying for works in stages and repaying as units are sold or let.
Working capital
covering wages, materials and supplier payments where income is lumpy.
Tax bills
meeting VAT or Corporation Tax without selling an asset at the wrong time.
Bridging between sales
a developer or investor drawing on the facility between one sale completing and the next purchase.

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How a property-backed revolving facility works

Valuationthe lender values the property and sets a facility limit as a percentage of that value.
First drawdownyou draw what you need at completion. Some lenders set a minimum drawdown; one lender on our panel requires at least 50% of the limit to stay drawn throughout the term.
Draw, repay, redrawduring the term you repay and draw again up to the limit, paying interest only on the balance you use.
Review or repayat the end of the term the facility is renewed, refinanced or repaid, often from a property sale or a longer-term mortgage.

First charge or second charge?

If the property is owned outright, the revolving lender takes a first charge and can usually offer its highest loan to value. If there is already a mortgage, some lenders will take a second charge behind it, with the combined borrowing capped at their maximum loan to value, and some accept an equitable charge. A second charge needs the agreement of the first lender in most cases, which adds time, so it is worth raising early. For property in England or Wales, the title register available through HM Land Registry shows whether a mortgage is already registered. Our guide to second charge business loans explains how this works.

Revolving facility, bridging loan or term loan?

A bridging loan suits a single purchase with a clear exit, drawn once and repaid once. A secured business loan or commercial mortgage suits long-term borrowing repaid in instalments. A revolving facility suits a business that needs money repeatedly and can repay it in between, such as a property trader or a contractor with uneven cash flow. If you would draw the full limit on day one and keep it drawn, a term loan is usually cheaper.

Costs to understand

Arrangement fee: usually a percentage of the facility limit, charged at the start.
Interest: charged monthly on the balance you have drawn.
Non-utilisation fee: some lenders charge a small fee on the part of the limit you do not use.
Exit or renewal fees: some lenders charge when the facility ends or is renewed.
Valuation and legal fees: paid by the borrower, as with any property-secured lending.

Underwriting

What lenders look at

The property: its type, condition, location and value, and how readily it could be sold.

Any existing mortgage, and whether the first lender will agree to a second charge.

What the facility will be used for and how each drawdown will be repaid.

The experience of the directors, particularly for property trading and development.

Business and personal credit history; some lenders consider past adverse credit case by case.

Side by side

Compare your options

How the main business finance structures work. Lenders set their own terms, so treat this as a guide to the questions to ask.

Option	How you repay	Security	Often used for
Unsecured business loan	Fixed instalments, usually monthly	No charge over assets; a personal guarantee is usually required	Growth, stock, tax bills and cash flow
Secured business loan	Fixed instalments, often over a longer term	A charge over property or other assets	Larger sums, property and refinancing
Revolving credit facility	Interest on what you draw; repay and redraw	Varies by lender and case	Recurring or uneven cash flow gaps
Merchant cash advance	A share of future card takings	No charge over assets	Card-taking businesses with uneven months
Asset finance	Regular payments over the life of the asset	The asset being financed	Equipment, vehicles and machinery
Invoice finance	Settled as customers pay their invoices	Your unpaid invoices	Businesses waiting on customer payment

General information only. Every lender has its own criteria, and all finance is subject to status.

Typical terms on our panel

Feature	What lenders on our panel offer
Facility size	From £50,000 to £10 million, depending on the lender
Loan to value	Usually up to 70% to 75%; lower for hospitality and land
Term	From one month to three years with some lenders, and up to five years with others
Security	A first charge, or a second or equitable charge with some lenders
Property types	Commercial, mixed-use and residential investment property; some types are excluded by some lenders
Borrowers	Mainly limited companies; some lenders also accept partnerships
Guarantees	Personal guarantees from directors are normally required
Rates	On application, charged on the balance drawn

Each lender sets its own limits by property type. For example, one lender on our panel lends up to 75% on residential investment property, 70% on commercial and 65% on hospitality, while another caps land at 60%. Lenders on our panel such as Reward Funding and Reparo Finance offer revolving facilities secured on property.

How we arrange a property-backed facility

Understand the needwe look at the property, any existing borrowing and how you expect to draw and repay.
Search the marketwe approach lenders on our panel whose property types, charge position and facility size fit.
Compare offerswe set out limits, loan to value, fees, minimum drawdowns and guarantees side by side.
Manage completionwe work with the valuer, your solicitor and, for a second charge, your existing lender.

Lenders make every credit decision. It is free to enquire; any broker fee is disclosed separately before you proceed. Start with our Instant Quotes tool to compare lenders in minutes.

FAQs

Questions clients ask

What is a property-backed revolving credit facility?

It is a credit limit secured on property that a business can draw, repay and redraw during an agreed term. Interest is charged only on the amount drawn. It works like a large secured overdraft, and is used by property businesses and other companies with uneven cash needs.

How much can I borrow against property on a revolving basis?

Lenders on our panel offer facilities from £50,000 to £10 million. The limit is set as a percentage of the property value, usually up to 70% to 75%, with lower limits for hospitality property and land.

Can I have a revolving facility on a property that already has a mortgage?

Sometimes. Some lenders will take a second charge behind your existing mortgage, with the combined borrowing capped at their maximum loan to value, and some accept an equitable charge. The first lender usually has to agree, so we raise it at the start.

Do I pay interest on the full limit?

No. Interest is charged on the balance you have drawn. Some lenders charge a small non-utilisation fee on the undrawn part, and some require a minimum amount to stay drawn, so compare total costs on the way you actually expect to use the facility.

Is a personal guarantee needed for a secured revolving facility?

Usually, yes. Even with property security, the lenders on our panel normally ask for personal guarantees from the directors. Some lenders also allow directors to offer other property they own as additional security.

Lender reviews

Lenders we compare for property-backed revolving credit facility

Independent write-ups of lenders on our panel that offer this type of finance. Smart Funding Solutions is a broker and is not part of any lender listed. See all lender reviews.

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