Revolving Credit Facilities UAE: How They Work and How to Get One

A revolving credit facility (RCF) is one of the most useful and flexible financial tools available to UAE businesses — yet many SME owners are not fully familiar with how they work or how to access them. Unlike a term loan (which is drawn once and repaid on a fixed schedule), a revolving credit facility provides a pre-agreed credit limit that the business can draw down, repay, and redraw as many times as needed within the facility period. This makes it ideal for managing working capital fluctuations, bridging the gap between payments to suppliers and receipts from customers, and funding seasonal inventory builds. This guide explains how UAE revolving credit facilities work, who qualifies, and how to negotiate the best terms.

How a Revolving Credit Facility Works in UAE

An RCF provides a business with access to a pre-agreed maximum credit limit — say AED 2 million — that can be drawn down in whole or in part at any time during the facility period (typically one year, renewable annually). The business pays interest only on the amount drawn at any given time, not on the total facility limit. When the drawn amount is repaid, the credit becomes available again — this is the 'revolving' element. A business with a AED 2 million RCF that draws AED 800,000 in March to pay suppliers, then receives customer payments and repays in April, has the full AED 2 million available again in May.

UAE banks price revolving credit at a margin above EIBOR (Emirates Interbank Offered Rate) or at a fixed rate, with a commitment fee (typically 0.5–1% per annum) charged on the undrawn portion of the facility. The commitment fee compensates the bank for keeping the credit available. For UAE businesses with highly seasonal or fluctuating working capital needs, the total cost of an RCF — interest plus commitment fee — is typically lower than maintaining a larger overdraft or term loan, as the business only pays full interest on what it actually uses.

RCF vs. Overdraft vs. Term Loan — Which Is Right for UAE Businesses?

A UAE bank overdraft and a revolving credit facility serve similar purposes — flexible, short-term working capital access — but RCFs are generally more formally documented, have specific drawdown and repayment mechanics, and are often available in larger amounts. Overdrafts tend to be smaller (up to AED 500,000–1 million for most UAE SMEs) and repayable on demand; RCFs are committed facilities that the bank cannot withdraw without notice, providing more certainty of access.

A term loan is the right instrument when the business needs a fixed amount for a specific purpose (purchasing equipment, funding a capital investment) and will repay on a schedule. An RCF is the right instrument for ongoing working capital management — recurring supplier payments, payroll bridging, seasonal inventory. Many UAE businesses benefit from holding both: a term loan for capital expenditure and an RCF for working capital, with each sized to the specific need.

UAE Bank RCF Eligibility and Security Requirements

UAE banks typically require a business to have at least two to three years of trading history, audited financial statements, and positive cash flow to qualify for an RCF. For businesses with strong receivables from creditworthy clients (government entities, large corporates), a receivables-secured RCF — where specific invoices are pledged as collateral — may be available even with shorter trading history. For businesses with UAE commercial or residential property, a property-secured RCF at a loan-to-value of 50–70% is achievable.

Unsecured RCFs for UAE SMEs are available from some banks for businesses with strong financial profiles and long banking relationships, but they require a higher credit quality — typically two or more years of profitable trading, a clean credit bureau report, and meaningful banking activity with the lending institution. Unsecured limits are generally lower than secured ones for the same credit quality.

Negotiating the Best RCF Terms in UAE

The most important negotiating points on a UAE revolving credit facility are: the facility limit (sized to actual working capital cycle needs, with a buffer for seasonal peaks); the interest rate margin over EIBOR (test across at least three UAE banks); the commitment fee on undrawn amounts (negotiable, particularly for larger limits); the drawdown mechanics (can the business draw in same-day funds, or is there a notice period?); and the renewal terms (automatic renewal vs. annual credit review, and the conditions precedent to renewal).

A UAE commercial finance broker who submits your RCF application to multiple banks simultaneously creates the competitive tension needed to drive the best terms. Gulf Oasis Commercial Brokers regularly negotiates revolving credit facilities for UAE SMEs across a wide range of sectors and facility sizes.