Revolving Credit Facility

Definition

A flexible lending arrangement that allows a borrower to draw down, repay, and redraw funds up to an agreed credit limit over the life of the facility, paying interest only on the amount outstanding plus a commitment fee on the undrawn portion. Revolving credit facilities are the primary source of working capital flexibility for corporate borrowers and are typically secured by a floating charge over the borrower's assets. They are distinct from term loans, which are drawn in full and repaid on a fixed schedule.