AFO · Glossary
Revolving Credit Facility (Revolver)
A line of credit that can be drawn, repaid, and redrawn multiple times within the facility limit during the commitment period.
What this term means in practice
A revolver is a line of credit with a limit and a commitment period. The borrower can draw, repay, and redraw multiple times within the limit, paying interest only on the drawn balance plus (usually) a standby fee on the undrawn portion. It's the textbook structure for funding working-capital fluctuations rather than fixed-term assets.
Cash-flow revolvers are underwritten against the borrower's overall cash flow and EBITDA. The commitment is fixed regardless of asset balances; covenants test the borrower's ongoing financial performance. ABL revolvers are different — the borrowing capacity itself fluctuates with the eligible-collateral balance (receivables + inventory). The two have different cost profiles, different oversight requirements, and different best-fit scenarios.
Revolvers are almost always priced over a benchmark rate (Prime in Canada) plus a margin. The all-in cost is the drawn rate plus the standby fee on undrawn capacity — a business that draws 30% of a $1M line averaged through the year pays interest on $300K and a standby fee on the $700K. The CPA models the projected utilisation curve to compare facility sizes meaningfully.
Where this matters in the catalog
Programs that turn on Revolving Credit Facility.
ABL Revolver (Asset-Based Lending)
Revolving line tied to eligible receivables and inventory. Scales with the business.
Conventional Senior Term Loan or Revolver
Cash-flow-underwritten facility from a chartered bank, credit union, or Schedule II lender.
Where the definition meets your situation.
The CPA can walk through how this concept applies to your business in twenty minutes — what providers will ask, where the negotiation matters, what the trade-offs actually look like in your numbers.