Revolving Loan Facility

AAA

DEFINITION of 'Revolving Loan Facility'

A financial institution that allows the borrower to obtain a business or personal loan where the borrower has the flexibility to decide how often they want to withdraw from the loan and at what time intervals. A revolving loan facility allows a company to drawdown, repay and re-draw loans advanced to it. This type of loan is considered a flexible financing tool due to its repayment and re-borrowing flexibility.

INVESTOPEDIA EXPLAINS 'Revolving Loan Facility'

A loan from this facility is provided over a specific period of time, usually one, three or six months. It is not considered a term loan because, during this allotted period of time, the facility allows the borrower to repay or take the loan out again. It is also different from a fixed monthly payment loan because a revolving loan lets borrowers use as much of the credit as is available and only pay interest on what they have used.

RELATED TERMS
  1. Credit Facility

    A type of loan made in a business or corporate finance context. ...
  2. Term Loan

    A loan from a bank for a specific amount that has a specified ...
  3. Commercial Loan

    A debt-based funding arrangement that a business can set up with ...
  4. Unsecured Loan

    A loan that is issued and supported only by the borrower's creditworthiness, ...
  5. Revolving Credit

    A line of credit where the customer pays a commitment fee and ...
  6. Facility

    A formal financial assistance program offered by a lending institution ...
RELATED FAQS
  1. What is the difference between compounding interest and simple interest?

    Interest is the cost of borrowing money, where the borrower pays a fee to the owner for using the owner's money. The interest ... Read Full Answer >>
  2. Does shopping for the best interest rate affect my credit score?

    Shopping for interest rates does not necessarily affect a person's credit score. When a borrower submits an application to ... Read Full Answer >>
  3. What is the difference between a drawdown in banking and a drawdown in trading?

    The term "drawdown" appears in both the banking world and in the arena of trading, but it has completely different meanings ... Read Full Answer >>
  4. How often is interest compounded?

    Interest can be compounded on any given frequency schedule. Common interest compounding time frames are daily, monthly, semi-annually ... Read Full Answer >>
  5. What are the pros and cons of getting installment credit to pay off your revolving ...

    Whether it is to finance big-ticket items, cover unplanned emergency expenses or provide a monetary cushion when cash flow ... Read Full Answer >>
  6. What does it mean when interest "accrues daily?"

    In financial terminology, "accrues" means the same thing as "accumulates." Interest is considered accrued when it is added ... Read Full Answer >>
Related Articles
  1. Retirement

    Should You Borrow From Your Retirement Plan?

    It makes sense to dip into your savings in some cases, but you must be aware of the potential consequences.
  2. Credit & Loans

    The Importance Of Your Credit Rating

    A great starting point for learning what a credit score is, how it is calculated and why it is so important.
  3. Credit & Loans

    College Loans: Private Vs. Federal

    Not all student loans are the same. Know what you're getting into before signing on the dotted line.
  4. Home & Auto

    The Benefits Of Mortgage Repayment

    Buying a home may be the biggest debt you'll ever incur. Learn why you should retire it sooner, rather than later.
  5. Retirement

    Getting A Loan Without Your Parents

    Use the 5 "W"s to finance your dreams without banking on a second signature.
  6. Options & Futures

    Home-Equity Loans: The Costs

    Learn the factors to consider when comparing the different programs offered by various lenders.
  7. Options & Futures

    Payday Loans Don't Pay

    Hold too tightly to this rescue line and you'll soon be drowning in debt.
  8. Options & Futures

    Different Needs, Different Loans

    Find out what options are available when it comes to borrowing money.
  9. Budgeting

    8 Reasons To Never Borrow From Your 401(k)

    Find out why dipping into your future savings can have serious consequences.
  10. Credit & Loans

    The Pros & Cons Of Personal Loans vs. Credit Cards

    One is not like the other. We help you decide where to borrow money from.

You May Also Like

Hot Definitions
  1. Fiduciary

    1. A person legally appointed and authorized to hold assets in trust for another person. The fiduciary manages the assets ...
  2. Expected Return

    The amount one would anticipate receiving on an investment that has various known or expected rates of return. For example, ...
  3. Carrying Value

    An accounting measure of value, where the value of an asset or a company is based on the figures in the company's balance ...
  4. Capital Account

    A national account that shows the net change in asset ownership for a nation. The capital account is the net result of public ...
  5. Brand Equity

    The value premium that a company realizes from a product with a recognizable name as compared to its generic equivalent. ...
Trading Center