revolving credit facility

Revolving credit facilities, or revolving loan facilities, are a type of committed credit facility offered by financial institutions which allow the borrower to borrow on an ongoing basis while repaying the balance in regular payments. Because it allows both borrowing and repaying, it is not a category of a term loan. Each repayment of the loan, minus interest and fees, replenishes the amount available to the borrower. Revolving credit facilities generally have no date of expiration and continue as long as the borrower retains good credit. A financial institution would consider a variety of criteria, such as a borrower’s financial situation, its creditworthiness, and market conditions, to determine whether a revolving credit facility should be approved. The flexibility that a revolving credit facility offers allows companies to have additional sources of funds when revenues are not stable. Yet, such a flexibility also means that a revolving credit facility may not continue to be available when a company’s financial situation continues to change negatively.

[Last reviewed in March of 2025 by the Wex Definitions Team ]

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