A Second Charge Revolving Facility is a flexible form of subordinated debt secured behind the senior lender on a development site. It allows developers to draw down funds, repay, and redraw as needed within an agreed limit. This facility is commonly used to manage cost overruns, phased works, or cash flow shortfalls during a live project. In UK property development finance, it can be an efficient way to retain liquidity without refinancing the entire capital stack. While interest is usually only charged on drawn amounts, facility fees and approval conditions may vary between lenders.
Within the Subordinated Debt 2nd Charge layer, a Second Charge Revolving Facility plays a tactical role in maintaining liquidity while preserving the senior loan structure. Its subordinated position means lender rights and enforcement are typically governed by a Charge, often alongside intercreditor arrangements that restrict repayment and security actions without senior consent. From a credit perspective, providers will closely monitor exposure using measures such as Security & Guarantee Coverage, particularly as drawings fluctuate. In practice, this facility supports dynamic project funding needs but requires careful coordination to avoid breaching covenants or disrupting the agreed capital hierarchy.
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