Revolver

Last Updated: Jun 7, 2019

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A Revolving Line of Credit (RLOC, Revolver) is a type of loan usually provided to a corporate borrower or individual by a bank or other financial institution. It is a line of credit used for operating purposes and can fluctuate each month depending on the customer's current cash flow need. A company can borrow up to a certain limit (draw) on the revolver and pay it back as needed/warranted. Revolvers are typically 3-5 years in tenor and are usually used to fund working capital requirements.

Revolving credit is useful for individuals or entities that experience sharp fluctuations in cash balances or unexpected expenses. Because of the convenience and flexibility, a higher interest rate and commitment fee is typically charged on revolving credit as opposed to traditional installment loans. Revolving credit typically comes with variable interest rates that may be adjusted.