Revolving Loan Facility


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.

BREAKING DOWN '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.

  1. Credit Facility

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

    A debt-based funding arrangement that a business can set up with ...
  3. Term Loan

    A loan from a bank for a specific amount that has a specified ...
  4. Facility

    A formal financial assistance program offered by a lending institution ...
  5. Unsecured Loan

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

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