Looking for a Revolving Loan?

How Does a
Revolving Loan Work?

So, how does revolving credit work?

The word ‘revolving’ refers to the fact that you can draw available funds repeatedly. 

Let’s say your business needs R50,000 for a not-to-be-missed deal on inventory, or a sudden cash flow gap. A revolving loan provider pre-approves your business for a certain credit limit, say R200,000, allowing you to draw the R50,000 you need.

You then only pay interest on that R50,000 outstanding balance, not the full R200,000 limit. 

Once you repay the R50,000 (plus any fees), the full R200,000 available funds immediately become accessible to you again. 

This continuous access, unlike a traditional term loan, gives you great flexibility because you have that reserve of cash available at any time, at short notice.

What are the Benefits of a Revolving Loan Facility?

A revolving loan facility stands out from many business lending models because of several unique benefits it can offer to customers.

1. Flexible funding

As a borrower, you get to gain control over your available funds. You can draw exactly what you need, when you need it, and repay at your own pace, allowing the funds to replenish for future use. This is excellent if you have to deal with unpredictable cash flow, like many businesses do.

2. Cost-effective use

You only pay for the loan amount you actually draw from the line of credit, not the entire available credit limit. 

Borrowers find that this is a much more cost-efficient short-term solution compared to other loan facility options, which come with a fixed fee and are subject to interest rates.

3. Ready access to capital

Once established, accessing funds is swift. There’s usually no need for repeated applications every time you need capital, so you don’t need to wait around for funds to take advantage of business opportunities or deal with unexpected expenses.

4. Improved cash flow management

Having a financial safety net allows you to bridge gaps between invoices or manage seasonal fluctuations without disrupting cash flow. You can also plan better if you know that you have cash on hand when you need it. 

“Small businesses that need to frequently fund short-term cash flow issues benefit greatly from this type of facility,” says Chantelle Honiball, Credit Manager at Lula. “Many must pay upfront for stock but offer customers 30- to 60-day payment terms, creating a cash flow mismatch. A facility bridges this gap – they can draw funds to cover inventory, then repay once customer payments come in, and repeat as needed.”

5. Funding for expansion

One of the biggest benefits of a revolving loan is how well it supports business expansion – the top funding need among South African SMEs, according to Finfind.

Unlike traditional term loans, a revolving loan gives businesses the flexibility to borrow, repay, and borrow again – without having to reapply each time. 

This makes it ideal for growing companies that need to seize new opportunities as they arise – whether that’s opening a second location, expanding operations, or scaling a service offering.

How Lula’s Cash Flow Facility Delivers Funding When You Need it

Lula’s Cash Flow Facility is built for the speed and flexibility that South African SMEs demand.  

We’ve streamlined the entire funding process so that you can potentially get funding within one business day, thanks to:

• A fast digital application: Apply online by linking your bank account or uploading statements securely for real-time assessment – no endless paperwork or branch visits.
• Quick approval and funding: Get a decision and receive available funds in your transactional account within as little as 24 hours after approval.
• Clear, fixed costs: Enjoy upfront transparency with no hidden initiation fee or unexpected charges. Your repayment schedule is clear from the start.
• Business-focused assessment: We look at your business’s true potential beyond just your credit score. Your recent revenue and trading history are just as valuable.

Even though you can apply for up to R5 million in funding, sometimes just having that bit extra can make all the difference.

“Sometimes, it’s the smaller amounts that make the biggest impact,” says Monique Kleingbiel, Credit Manager at Lula. “One of our customers was approved for a R35,000 Cash Flow Facility, which gave them the flexibility to manage cash flow during a tough period. When client payments were delayed, they used their Facility to bridge the gap and keep operations running smoothly.”

In short, Lula’s Cash Flow Facility is a strategic source of capital that keeps your South African business agile, resilient, and ready for whatever comes next.

Cash Flow Facility vs
other funding options