Two of the most common shapes of short-term business borrowing are the fixed-sum loan and the revolving credit facility. They sound similar but behave quite differently, and choosing the right shape matters more than chasing the lowest headline rate. This guide walks through how to decide.
What each one is
A short-term loan is a single fixed sum, advanced once, repaid over an agreed term. You know the amount, the schedule and the total cost from the start. A revolving credit facility is an agreed limit you can draw against repeatedly, paying down and re-drawing as your cash flow moves; you are typically charged only on what you have actually drawn.
Which fits which situation
Match the borrowing to the shape of the need, not the other way round.
- One known cost, one time — a specific purchase, a one-off bill — points to a fixed-sum loan. It is simpler and the total cost is fixed.
- Recurring or unpredictable gaps — a wages month that is tight, stock you buy in waves, the occasional surprise — point to a revolving facility, because you only pay for what you use and the limit stays available.
- A single supplier bill you want to spread — points to a split-payment product rather than either of the above.
Questions to ask yourself
| Question | If yes, lean towards… |
|---|---|
| Can I name the exact amount and when I'll clear it? | A fixed-sum short-term loan |
| Will I dip in and out more than once? | A revolving facility |
| Is this really one specific supplier bill? | A split-payment product |
| Do I need a large sum for a long time? | A mainstream SME lender, not short-term credit |
Once you know the shape, compare the cost properly. For short-term borrowing, an APR can mislead; look at the total cost of credit in pounds for your actual term. See how to compare the total cost of credit.
At Credicorp these shapes map to a one-time Business Loan, Credicorp Flex, and Credicorp Slice respectively. Whichever you consider, business lending to a company is outside FCA consumer-credit regulation under Article 60B FSMA RAO 2001 and is not covered by the Financial Ombudsman Service or the FSCS — so always weigh the protections as well as the price.
See also: A simple framework for comparing business finance options, APR vs total cost: which number should you trust?, Asset finance vs a business loan: how to compare them.