Corporate Finance
Working Capital
Growth Capital
Recapitalization
Refinancing
Debt Financing
Equity Financing
Debt Financing
Resolving Credit Facility
A revolving credit facility, or revolver, is an asset-based facility designed to optimize the availability of working capital from the borrower’s current asset base. Funds are advanced (or loaned) to the company based on a certain percentage of the company’s eligible current assets, commonly including accounts receivable and inventory. Under the terms of such an agreement, as the borrower repays a portion of the loan, an amount equal to the repayment amount can be drawn down (or borrowed) again.
The term “revolver” is often used because the amount that the lender is willing to lend increases or decreases if the amount of the assets securing the loan increases or decreases, respectively.
A revolving credit facility typically has a term of one to three years, often with renewal provisions. The advantage of a revolver is that the company can use its current assets as collateral to secure a loan rather than wait until the collateral has been converted to cash.
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