A credit limit is the most a business can borrow or draw under a particular facility. It acts as a ceiling: you can use funds up to that point, but not beyond it. The limit is set by the lender as part of assessing the company.
How a limit is set
A credit limit reflects what the lender judges to be appropriate and affordable for the business. It is not a target to reach but a boundary within which the company can operate. Common factors that shape a limit include the following.
- How the company trades and its income pattern.
- Existing commitments and overall affordability.
- The company's credit profile and history.
Using a limit sensibly
Having a limit available does not mean it should all be used. The healthiest approach is to draw what the business genuinely needs and can comfortably repay. On a flexible facility, repaying what you have drawn can free up room to draw again later.
Credicorp lends only to UK limited companies and LLPs for business purposes. Any limit on your Credicorp Flex or Credicorp Slice facility is shown in your account and your agreement. If your needs change, you can talk to us, though any change is subject to a fresh affordability view.
See also: What is a revolving credit facility?, Short-term loan vs revolving credit facility: a decision guide and How do I draw down from my Credicorp Flex facility?.