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 $1,000,000 line averaged through the year pays interest on $300,000 and a standby fee on the $700,000. 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.